Why is financial literacy important?
every once in a while, we do question ourselves about why is financial literally important? we are surrounded by different kinda people…
Intangible assets are non-physical assets that are important to a company, such as a trademark, patent, copyright, or franchise agreement.
Assets are possessions you own that can be used to make future profits for your company, such as cash, inventory, real estate, office equipment, or payables, which are payments your company offers to customers. Assets are issued in different varieties, including:
Current Assets: These can be converted into cash within a year
Fixed Assets: These may not be immediately changed into cash, but they can be used to generate future earnings.
Asset allocation refers to the method of investing money in different types of assets. These include bonds: When you purchase a bond, you are in essence borrowing money from issuers, such as the government or the corporation, and will receive interest payments and repay the loan when the due date comes around.
A balance sheet is a financial statement that lists an organization’s wealth, also known as its book value, for a particular time period. This financial statement includes the organization’s assets, liabilities, and shareholders equity.
The Balance Sheet Equation: Balance sheets are arranged according to the following equation: Assets = Liabilities + Owners’ Equity
Capital Gain
An increase in the value of an asset above the original price that you bought it would be considered a capital gain. If you sell the asset for less than the price for which you bought, that would be considered a capital loss.
Cash Flow Statement
A cash flow report is a report prepared to provide a detailed analysis of reported cash flows. It shows how a company generated and spent its cash over the course of a reporting period by including a description of its net cash flow from operating, investing, and financing activities during that reporting period.
Compound Interest
A free cash flow report provides an analysis of a company’s reported cash flows over a period of time. It demonstrates how a company spent and generated its cash, and gives a detailed summary of all its net cash flow from operating, investing, and financing between reporting periods.
Depreciation
The gradual decrease in the value of a possession’s worth is categorized as depreciation. The phrase is commonly used in accounting and refers to the amount of assets’ worth that a business has used over a period of time.
EBITDA
An acronym of Earnings Before Interest, Taxes, Depreciation, and Amortization, EBITDA is a popular measure of a company’s ability to generate cash flow. To obtain EBITDA, you would sum net profit, interest, taxes, depreciation, and amortization.
Equity
Equity, also known as owners equity on a balance sheet, is the amount of money that belongs to the owners of the company representatively after all of the debts and possessions are listed. You can do this with the accounting equation. Owners equity, also known as shareholder s equity, can be determined by subtracting total liabilities from assets.
Income Statement
An income statement is an accounting report that shows a business’s income and expenses over a defined period of time. It is also called a profit and loss (P&L) statement.
Liquidity
Your assets’ liquidity is the speed of their conversion into cash. Because cash is the most liquid asset, it’s the most liquid thing of all. Less liquid and slower selling confi res and lands are some of the the least liquid possessions.
Net Worth
Calculating net worth is all about taking your assets, debts, and property into consideration. The remainder of these ratios will allow you to assess your current financial condition.
Return on Investment (ROI)
Stock Exchange returns are a simple calculation that determine the expected return on a project compared to the budget of that project, often shown as a percentage. This method is often used for determining which projects a business should pursue. ROI is calculated using the following formula: ROI (Income – Cost) Cost 100.
Valuation
Valuation is the process of determining the current value of an asset, company, or liability. There are various ways to value a business, but regularly repeating processes can be helpful, as you will then be ready if ever faced with an opportunity to merge or sell your company, or are seeking funding from outside parties.
Working Capital
Net working capital is the difference between a company’s current assets and liabilities. Working Capital represents the amount of money that can be earmarked from an organization’s operations for day-to-day operations.
every once in a while, we do question ourselves about why is financial literally important? we are surrounded by different kinda people…