Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The two fundamental sources of equity in a company are stockholders and creditors their combined interests are called total equities. To discover the equity ratio divide stockholders' equity by total equities or total assets since total equities equals total assets. In formula format
Equity ratio=Stockholders 'equity/Total equities
The elevated the proportion of equities or assets supplied by the owners the more solvent the company. But a high portion of debt may perhaps indicate higher profitability because quite often the interest rate on debt is lower than the rate of earnings realized from using the proceeds of the debt.
An illustration illustrates this concept assume that a company with USD 100000 in assets could have raised the funds to acquire those assets in these two ways
When a company undergo operating losses its assets decrease. In Case (A) the assets would have to get smaller by 80 per cent before the liabilities would equal the assets. In Case (2) the assets would have to minimize only 20 percent before the liabilities would equal the assets. When the liabilities go beyond the assets the company is said to be insolvent. So creditors are safer in Case (A) and will more readily lend money to the company. But if funds borrowed at 10 per cent are used to produce earnings at a 20 per cent rate Case (B) is preferable in terms of profitability. Thus owners are better off in Case (B) if the borrowed funds can earn more than they cost.
Q. Measurement in financial statements? In December 1984 the FASB issued Statement of Financial Accounting Concepts No. 5 The Recognition and Measurement in Financial Statement
Funds Flow Analysis : This study is occasionally called as 'Statement of alter in Financial Position". Beneath this analysis, a declaration is prepared which give details the
1. Listed below are account balances taken from the adjusted trial balance of XYZ Inc. as of December 31, 2012. Credit Account
Q. Gain and loss recognition principle? The gain and loss recognition principle states that we record gains merely when realized but losses when they first become evident. Ther
1. For what reasons do corporations purchase the stock of other corporations? 2. Explain how marketable securities should be classified in the balance sheet. 3. Describe the valu
Q. What is Sales revenues? The sale of goods takes place between two parties. The seller of the merchandise transfers them to the buyer in exchange for cash or a promise to pay
Q. Define Expenses in terms of accounting? Expenses are outflows or else other using up of assets or incurrence of liabilities (or a combination of both) from rendering service
ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account. elaborate on the statement and explain why journal is neces
assignments
Accrual Concept The accrual concept makes a distinction among the receipt of cash, and the right to obtain it, and the payment of cash and the legal obligation for pay it. In
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd