Category: Bookkeeping

Part of the basics is looking at how you pay for your assets—financed with debt or paid for with capital. These may include loans, accounts payable, mortgages, deferred revenues, bond issues, warranties, and accrued expenses. Although the balance sheet always balances out, the accounting equation can’t tell investors how well a company is performing. This transaction…

If business operations are good, the company’s financial leverage will also be good. It’s calculated by dividing a firm’s total assets with total equity. On the other hand, company DEF, which is in the same sector as company ABC, has total assets of $20 million and stockholders’ equity of $10 million. This means company DEF…