Current liabilities are the payments that are due within the near term– usually within a one-year time frame. Larger companies may have a lower current ratio due to economies of scale and their ability to negotiate better payment terms with…

These costs include the costs of direct materials, direct labor, and manufacturing overhead. They will not be expensed until the finished good are sold and appear on the income statement as cost of goods sold. Period costs are closely related…

It shows how much money you have to cover fixed costs and generate profit. Fixed costs are expenses incurred that do not fluctuate when there are changes in the production volume or services produced. These are costs that are independent…

While not always required, audits are often necessary for larger organizations or those that 5 Main Benefits of Accounting Services for Nonprofit Organizations receive government grants. Especially if you worked for a for-profit organization before moving to the nonprofit sector,…

This account is used to record the income earned from the sale of goods or services. These accounts are used to record the cost of acquisition and depreciation of these assets. The balance of these accounts decreases over time due…

The five-step dupont formula option puts the spotlight on leverage and can help determine when and if increases in leverage mean an increase in ROE. Both examine changes within a company rather than focus on just one basic ratio. The…

The operating activities section of the Statement of Cash Flows provides valuable insights into the day-to-day financial operations of a nonprofit organization. It outlines the cash inflows and outflows that are directly related to the organization’s core activities. Overall, the…

Regardless of how contribution margin is expressed, it provides critical information for managers. Understanding how each product, good, or service contributes to the organization’s profitability allows managers to make decisions such as which product lines they should expand or which…

Book value per share relates to shareholders’ equity divided by the number of common shares. Earnings per share would be the net income that common shareholders would receive per share (company’s net profits divided by outstanding common shares). BVPS relies…

The book value per share of a company is the total value of the company’s net assets divided by the number of shares that are outstanding. Book value per share (BVPS) tells investors the book value of a firm on…