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đź–¨ Print⏱ 3 min readWith more than $57 trillion in mergers and acquisitions, according to the Institute for Mergers, Acquisitions & Alliances, understanding how the Exchange Ratio works is essential for businesses and investors to maximize these processes. The ratio assesses how many shares the company that’s purchasing the takeover company must issue per share of the takeover business. Transactions that use shares for part or whole of the payment are able to leverage this integral benchmark. It’s important to keep in mind that the exchange ratio may provide parties helpful insight on transactions involving all or part equity, but it won’t be beneficial forRead More →

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đź–¨ Print⏱ 3 min readThis accounting and tax method refers to a treatment used by the Internal Revenue Service (IRS) to obtain tax remittances on sales of depreciated property. Understanding how it works is essential for filers to make the most of it. Required Conditions As property depreciates, its value declines. When depreciated assets are sold, it’s able to be filed as ordinary income as long as the transaction’s price is above the property’s adjusted cost basis. The gap between the sales price and its adjusted cost basis must be filed as a component of the individual’s ordinary income. Defining Adjusted Cost Basis Adjusted CostRead More →

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đź–¨ Print⏱ 3 min readHorizontal Analysis provides businesses a method to examine financial statement entries by looking at the documents’ number for a specific accounting time frame compared to the same length of a historical period for the same accounting line item. Breaking the Process Down It’s a way to measure trends and variances by looking at the current year’s values versus the reference year. This helps an analyst figure out if the values increase or decrease. It’s either done on an absolute value or a percentage change basis. The analysis provides a company’s growth and financial position against competitors. This method is different comparedRead More →

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When it comes to raw materials, especially for fossil fuels, it’s essential to evaluate existing and potential production capabilities for such companies. Using the EV/2P Ratio is a powerful tool when evaluating fossil fuel-related…Read More →

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While Cash EBITDA isn’t recognized by generally accepted accounting principles (GAAP), it’s a way for company owners and investors to account for deferred revenue during valuation modeling. This financial metric…Read More →

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With 57 percent of public companies offering their workers employee stock purchase plans (ESPPs), according to the National Association of Stock Plan Professionals (NASPP), understanding how qualifying dispositions work is an essential…Read More →

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An activity cost driver is anything that causes a company’s variable costs to either reduce or grow. Since measuring an activity cost driver is a way to streamline the administration of managing production costs, it’s…Read More →

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Whether it’s an individual investor or a business owner looking to increase their earning power, understanding how accretion works is essential for individual and business investors to make the correct decisions…Read More →

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When it comes to evaluating a business, there are many ways to perform a valuation. One way to do so is to use the Q Ratio. Known as Tobin’s Q Ratio or simply the Q Ratio, this method looks at the proportion between the values…Read More →