What is Earnings before Interest and Taxes (EBIT)? Earnings before interest and taxes (EBIT) is a financial metric that measures a company’s operational profitability. EBIT is calculated by subtracting a company’s expenses excluding interest and taxes from its total sales or revenues. EBIT gives a significant indication of a company’s operating profitability. Because EBIT is … Read more
An audit that is limited to a particular time span (usually less than a year) or accounts or operation is known as limited audit. Scope of limited audit is less wide compared to full audit. Legal compliance is not mandatory for a limited audit. Examples of Limited Audit Examples of limited audit are: Interim audit … Read more
Accounting Infrastructure is a set of systems and conventions that directs the functional accounting practice of an enterprise or a professional body under a legal framework and adopted accounting standards. A standard accounting infrastructure ensures the quality of financial reporting for its stakeholders. Components of a standard accounting infrastructure are: 1. Information producer and users … Read more
[subtitleh2]What is a stockholder or shareholder?[/subtitleh2] A stockholder is an individual, company or any other entity who owns at least one or any number of share of a corporation’s capital stock. Is there any difference between stockholder and shareholder? The answer is NO. Both are same. In the United States, people love to name by … Read more
Balance sheet is one of the four major financial statements of a company or entity. Balance sheet portraits an entity’s economic and financial status on a given date. It’s a summary of entity’s assets, liabilities and equity on a certain date. It’s like a photograph of an organization’s financial health taken on a specific time. … Read more
Balance of trade is the difference between the value of exports and imports of goods and/or services of a country in a specific period. As it measures the difference between exports and imports, it is also referred to as trade balance. Balance of trade is a significant element of national accounting that identifies exports and … Read more
The EBIT margin is a financial ratio that measures the profitability of a company calculated without taking into account the effect of interest and taxes. It is calculated by dividing EBIT (earnings before interest and taxes) by sales or net income. EBIT margin is also known as operating margin. It is characterized by reflecting the … Read more
Financial statements are a set of four most significant reports of a business corporation or an organization. It tells about the overall health of a business in terms of finance. A standard set of Financial statements include: Balance Sheet or Statement of Financial Position Income statement or Statement of Income Cash Flow statement or Statement … Read more
Earnings per share (EPS) is the part of a company’s net profit obtained by each outstanding share of common stock. Earnings per share is a financial metric, that indicates the profitability of a company. Earnings Per Share Formula: We can calculate EPS by using the formula below: The number of outstanding shares of a company … Read more
Accounting is the art of serving necessary and effective financial information of economic entities through the process of recording, summarizing, analyzing and reporting transactions to concerned parties. It conveys information about the financial health of a business or individual. That is why accounting is well known as an information system in today’s business world. In … Read more
