Fair Value vs Market Value There are many methods that a company can use to value their assets. Companies conduct frequent analysis on the value of the assets that the business holds, in order to ascertain the total value of the business, and to see how much the business could earn in the event […]
Difference Between Gross Profit and Operating Profit
Gross Profit vs Operating Profit Gross profit and operating profit are important calculations aimed at measuring the profitability levels of the firm. Both these numbers are derived from the information obtained from the company’s income statement. Gross profit shows the sales that are left once cost of goods sold are reduced and operating profit […]
Difference Between Gross Profit and Gross Margin
Gross Profit vs Gross Margin Companies record financial information about their business activities in order to assess the financial position of the firm. A range of numbers and values are calculated for this purpose, which include the calculation of the company’s gross profit and gross margin. Close attention is paid to these ratios as […]
Difference Between Operating Profit and Net Profit
Operating Profit vs Net Profit Net profit and operating profit are two important components in the study of accounting. Both sound very similar to each other and are, therefore, consistently confused to mean the same thing. One of the main similarities between the two is that they both appear in a firm’s financial statements […]
Difference Between Direct and Indirect Costs
Direct vs Indirect Costs Companies experience a number of expenses in their day to day business activities. Some of these expenses can be directly associated with the production of goods and services while some of the expenses cannot be directly related to any product or project in particular. These costs are known as direct […]
Difference Between Financial Accounting and Cost Accounting
Financial Accounting vs Cost Accounting Accounting is divided into two main categories known as financial accounting and cost accounting. Financial accounting is mostly used for external reporting purposes, in which financial transactions are recorded according to the generally accepted accounting principles. Cost accounting is mostly used for internal purposes where financial information is recorded […]
Difference Between Cost of Capital and Cost of Equity
Cost of Capital vs Cost of Equity Companies require capital to start up and run business operations. Capital maybe obtained using many methods such as issuing shares, bonds, loans, owner’s contributions, etc. Cost of capital refers to the cost incurred in obtaining either equity capital (the cost incurred in issuing shares) or debt capital […]
Difference Between Levered and Unlevered Free Cash Flow
Levered vs Unlevered Free Cash Flow Free cash flow provides a firm an indication of the amount of money a business has left for distribution among shareholders and bondholders. Free cash flow is generally calculated by adding cash flows from operating activities to cash flows from investing activities. There are two forms of free […]
Difference Between Liability and Equity
Liability vs Equity At the year end, organizations prepare financial statements that represent their activity for the specific period. One such statement that is prepared is the balance sheet that includes a number of items such as assets, liabilities, equity, drawings, etc. The following article discusses two such balance sheet items; equity and liabilities, […]
Difference Between Joint and Several Liability
Joint vs Several Liability Joint liability and several liability describe how debts/liabilities/obligations are shared when a number of parties are involved. In a business operation, it is important that parties sign a contract that lay out how liabilities are to be shared so that there is no conflict among parties when faced with a […]
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