Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition
by Michael Taillard, Joseph Kraynak, Kenneth W. Boyd
Chapter 6
Formulating Equations
IN THIS CHAPTER
Calculating profit margin and rate of return
Making the most of a company’s existing assets
Wrapping your brain around the concept of liquidity
Evaluating a company’s solvency
Handling your projects with care
In business, information is most valuable when you can use it to make well-informed decisions. Financial information can help you reduce spending, operate more efficiently, and increase profits.
This chapter covers some useful financial formulas that you can use to make financially sound data-based decisions. We show you how to gauge a company’s profitability, determine how efficiently the company is using its existing assets, manage cash more effectively, and keep an eye on long-term debt. (An asset is a resource owned by a company that’s used to generate revenue for that company.)
Analyzing Profitability
Profit is defined in the income-statement formula as revenue less expenses, and it can also be defined as net income. Although ...
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