What Is Quality of Earnings? Quality of earnings refers to the portion of income realized from a company’s core operations that generate sustainable free cash flow. The quality of a corporation’s earnings is revealed by excluding data that may affect the true bottom-line performance. For example, abnormalities, accounting deception, or […]
Accounting
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What Is Other Comprehensive Income? Net income and other comprehensive income (OCI) are both included in comprehensive income on the Income Statement. However, OCI is made up of revenues, expenses, profits, and losses that are to be included in comprehensive income but not in net income. In business accounting, other […]
What Is Absorption Costing? Absorption costing is an accounting method and reporting standard that tracks and allocates expenses associated with a manufacturing process to distinct products. It is sometimes called full costing. As an accounting method, it captures all fixed and variable costs associated with manufacturing a particular product. The […]
LIFO Method – What Is Last In, First Out? The LIFO Method of accounting stands for last-in, first-out. It means the latest purchased or produced goods are considered as sold and expensed first. In other words, the cost of the most recent product acquired (or created) is the first to […]
What Is Receivership? Receivership is a court-appointed condition placed on a company to protect property controlled by a person sued in court. It is a legal remedy available to secured creditors to recover outstanding amounts in the event the company defaults on its loan payments. Receivership and bankruptcy are not […]
What Is the Gordon Growth Model (GGM)? The Gordon Growth Model is a stock valuation method that measures a stock’s present value by computing the future series of dividends assumed to be growing at a constant rate. The model is used to calculate a stock’s intrinsic value based on a […]