An auditor is a person authorized to review and verify the accuracy of financial records and ensure that companies comply with tax laws. They protect businesses from fraud, point out discrepancies in accounting methods and, on occasion, work on a consultancy basis, helping organizations to spot ways to boost operational efficiency. Auditors work in various capacities within different industries.
The Hamada equation is a fundamental analysis method of analyzing a firm’s cost of capital as it uses additional financial leverage, and how that relates to the overall riskiness of the firm. The measure is used to summarize the effects this type of leverage has on a firm’s cost of capital—over and above the cost of capital as if the firm had no debt.
On account is an accounting term that denotes partial payment of an amount owed or the purchase/sale of merchandise or services on credit. On account can also be referred to as “on credit.”
An unconditional probability is an independent chance that a single outcome results from a sample of possible outcomes. The term refers to the likelihood that an event will take place independent of whether any other events take place or any other conditions are present.
House poor is a term used to describe a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance, and utilities. Individuals in this situation are short of cash for discretionary items and tend to have trouble meeting other financial obligations, such as vehicle payments.
The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. Thelaw of supply says that as the price of an item goes up, suppliers will attempt to maximize their profits by increasing the quantity offered for sale.
Price fixing is setting the price of a product or service, rather than allowing it to be determined naturally through free-market forces. Although antitrust legislation makes it illegal for businesses to fix their prices under specific circumstances, there is no legal protection against government price fixing. In an ill-fated attempt to end the Great Depression, for example, Franklin Roosevelt forced businesses to fix prices in the 1930s. However, this action may have actually prolonged the downturn.
The accounts receivable turnover ratio is an accounting measure used to quantify a company’s effectiveness in collecting its receivables or money owed by clients. The ratio shows how well a company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or is paid. The receivables turnover ratio is also called the accounts receivable turnover ratio.
Price fixing is setting the price of a product or service, rather than allowing it to be determined naturally through free-market forces. Although antitrust legislation makes it illegal for businesses to fix their prices under specific circumstances, there is no legal protection against government price fixing. In an ill-fated attempt to end the Great Depression, for example, Franklin Roosevelt forced businesses to fix prices in the 1930s. However, this action may have actually prolonged the downturn.
The accounts receivable turnover ratio is an accounting measure used to quantify a company’s effectiveness in collecting its receivables or money owed by clients. The ratio shows how well a company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or is paid. The receivables turnover ratio is also called the accounts receivable turnover ratio.