Trade Credit
What is Trade Credit?Trade credit is money that a business owes to its suppliers for goods that it has purchased. It’s like borrowing money… Read Article
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Relevant Costs
Relevant costs are defined as the costs that arise in the future and are different for different alternatives. The concept of relevant costs is… Read Article
Differential / Incremental Cost
Differential Cost or Incremental Cost is the difference in total relevant cost between two alternatives. These alternatives are ‘make or buy,’ ‘two different levels… Read Article
Sources of Working Capital
Every organization needs working capital to finance its daily operations and short-term assets (current assets). Working capital is essential to ensure the smooth functioning… Read Article
Return on Equity (ROE)
Return on Equity or ROE is a profitability ratio specially meant for the equity shareholders. It is expressed in percentage (net profit/shareholder’s fund *… Read Article
Capital Structure Theory – Modigliani and Miller (MM) Approach
The Modigliani and Miller approach to capital theory, devised in the 1950s, advocates the capital structure irrelevancy theory. This suggests that the valuation of… Read Article
Marginal Cost – How to Calculate, Relationship with Fixed & Variable Cost
You would agree that when a manufacturing unit increases the level of production, the total cost of production will also increase. This increment in… Read Article
Cost, Costing, Cost Accounting and Cost Accountancy
Cost, costing, cost accounting, and cost accountancy are normally used interchangeably but are not synonyms. The meaning of these terms is related and similar,… Read Article
Types of Invoice / Receivable Factoring
There are various types of factoring based on variations in the different services and agreements between the business and the factor. Such different types… Read Article
Cost of Equity – Dividend Discount Model
Cost of equity can be worked out with the help of Gordon’s Dividend Discount Model. The model focuses on dividends, as the name suggests.… Read Article
Advantages and Disadvantages of Internal Rate of Return (IRR)
The advantages and disadvantages of the internal rate of return are important to understand before applying this technique to specific projects. There must be… Read Article