The board of directors of a corporation possesses sole power to declare dividends. The legality of a dividend generally depends on the amount of retained earnings available for dividends—not on the net income of any one period. Firms can pay dividend... Read more
A company that lacks sufficient cash for a cash dividend may declare a stock dividend to satisfy its shareholders. Note that in the long run it may be more beneficial to the company and the shareholders to reinvest the capital in the business rather ... Read more
For example, the statement may include line items for changes in the ending balance of accounts receivable, inventory, and accounts payable. The intent is to convert the entity’s net income derived under the accrual basis of accounting to cash ... Read more
It is an estimated expense that is scheduled rather than an explicit expense. In this lesson, we'll use a hypothetical road trip and some other real-life examples to show you how to use the Poisson distribution, a formula for calculating the probabil... Read more
The main aim of real accounts is to determine the company’s financial standing in terms of what it owns vs. what it owes. This can happen if you've never had any relevant transactions or if you sell off all the assets in a particular account. I... Read more
Capital Stockmeans, with respect to any Person, any capital stock , shares, interests, participations or other ownership interests of such Person and any rights , warrants or options to purchase any thereof. Capital Stockmeans, for any entity, any an... Read more
An expense is the cost of operations that a company incurs to generate revenue. Unlike assets and liabilities, expenses are related to revenue, and both are listed on a company's income statement. Current liabilities are often loosely defined as liab... Read more
We won’t be elaborating on market value calculation in this section since will be looking at market value calculation in the sections below. So, we’ll take a simple example to run you through exactly how the value of real estate is assess... Read more
The advantage here is that expenses are recognized, and net income is decreased, in the time period in which the benefit was realized instead of whenever they happened to be paid. A deferred expense is a cost that has already been incurred, but which... Read more
Gain the confidence you need to move up the ladder in a high powered corporate finance career path. Debt capacity refers to the total amount of debt a business can incur and repay according to the terms of the debt agreement. On the flip side, if the... Read more
