Finance / July 19, 2018 / Hana Cannon
Cumulative interest is sometimes used to determine which loan in a series is most economical. However, cumulative interest alone does not account for other important factors, such as initial loan costs (if a lender pays these costs out of pocket as opposed to rolling them over into the loan's balance) and the time value of money.
All business expenses can be divided into two types of costs: fixed and variable. Fixed costs are those expenditures that do not change based on sales (or lack thereof). That is, they are set expenses the business has committed to that are not tied to production volume.
Working capital is not mandatory to be put inside the financial statements. It is the measure of the liquidity of the firm and it gives us ideas about how well a company can meet its current obligations.
Net equity valueNet equity value is the fair market value of a business’s assets minus its liabilities. This measured value is used to determine a business’s net worth - or the funds that would be left over and available to shareholders if all liabilities and debts were paid off.
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