Horizontal integration vs. Vertical integration Acquisition and merger are important strategies for an organization to grow its business. It involves the combination of two companies where one company takes over the other and establishes its control over it. The main motive behind this strategy is to expand the geographical reach, product range, and customer base … Read more
Controllable and Uncontrollable Cost Controllable and uncontrollable costs are two distinct types of costs that businesses must consider when creating and managing a budget. It is important to understand the differences between these types of costs, as each requires a different approach for management. What are Controllable Costs? Controllable costs are expenses that managers can … Read more
What is the Ex-factory Price? The ex-factory price is the price that a manufacturer charges for a product when it is sold to the first customer in the supply chain. This price does not include shipping or other handling charges and is typically lower than the retail price of the product. The ex-factory price is … Read more
What is the Realization Concept in Accounting? The realization concept is an accounting principle that dictates when revenue should be recognized. According to this principle, revenue should only be recognized when it is realized or realizable and earned. This means that revenue should only be recognized once the seller has provided the goods or services … Read more
What is a Performance Guarantee? A performance guarantee is an agreement between two parties that one party will complete a task to the satisfaction of the other party. The completion of the task may be guaranteed by a third party, such as a bank or insurance company. Performance guarantees are often used in construction contracts, … Read more
Net Realizable Value in Accounting Net realizable value is an important concept in accounting that refers to the projected selling price of an asset minus the costs of selling it. This value is used to determine the impairment write-down of an asset. If a company has a piece of equipment that is currently being used … Read more
Substance Over Form in Accounting In business, the phrase “substance over form” is often used to emphasize the importance of substance over appearance. This philosophy is based on the belief that businesses should be evaluated based on their underlying economic reality, rather than their superficial appearance. For example, a company may have a strong balance … Read more
Market Penetration and Market Skimming Price Price is an important factor in the marketing mix of any product or service. Price plays a critical role in determining the success of a product or service in the marketplace. Market penetration pricing and market skimming pricing are two common pricing strategies used by companies to capture a … Read more
What is Plowback Ratio? The plowback ratio is a measure of how much earnings a company has reinvested into the business after sharing dividends. A high plowback ratio indicates that a company is retaining a large portion of its earnings, while a low plowback ratio indicates that the company is paying out most of its … Read more
Five Elements of Financial Statements Financial statements are an important tool used by investors and businesses to assess the financial condition of a company. The primary elements of financial statements, also known as the balance sheet equation, are assets, liabilities, equity, revenue, and expenses. This article will discuss the primary elements of financial statements and … Read more