Breakeven Quantity of Sales
“Breakeven point” or “breakeven quantity of sales” refers to the number of units of a company’s product that is produced and sold at which point the company’s net income becomes zero. Computing Breakeven Quantity of Sales At the point where…
Operating Breakeven Quantity of Sales
The breakeven quantity of sales or just simply breakeven point indicates the number of units of a company’s product that is produced and sold at which point the company’s net income becomes zero. Similarly, we can specify the breakeven point…
Dividends
When a company pays dividends to its shareholders, it is giving them a portion of its earnings. The amount that is paid to each shareholder is dependent on the number of shares that they own. Indeed, the payout and is…
Financial Reporting and Financial Statement Analysis
Financial reporting and financial statement analysis are two very important terminologies in finance. The two terms describe how a company’s financial performance is made known to persons outside the company and how this performance is assessed and used to make…
Financial Statements
The statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows represent a complete set of financial statements. These statements can be used in financial statement analysis to evaluate a company’s performance…
The Financial Statement Notes
Financial statements are accompanied by financial statement notes and supplementary information that help the users of financial statements to understand the information that is reported. Importance of Financial Statement Notes and Supplementary Information Notes to the financial statements provide important…
Audits of Financial Statements
Annual reports present financial statements that have been audited by an independent accounting firm. Auditing of financial statements is an important function that is performed under specified auditing standards and which may be required by law, regulation, or some form…
Other Information Sources
To get a fairly accurate picture of a company’s financial position and financial performance, analysts tend to base their financial statement analysis on the company’s audited, annual financial statements. The audit of the annual financial statements, in this case, must…
The Financial Statement Analysis Framework
The financial statement analysis framework is a generic term used to describe the process in which analysts assess financial statements, supplemental information, and other sources of information. Essentially, financial statement analysis framework helps analysts to draw conclusions and make informed…
How Business Activities are Classified
When reporting on a company’s financial position and performance, it is very important to appropriately classify various business activities of the company. Understanding how this classification is done lays the foundation for understanding financial reporting mechanics. Indeed, this helps in…
