Articles

Various forms of profit

Although the profit appears to be unique and comparable term, it is entirely NOT the case. This series of articles discusses possible profit forms - from the perspective of financial accounting, management accounting, tax world or forms profits, which are commonly used in the corporate world (EBIT,

Interest burden

Interest burden is one of the indicators of indebtedness and financial structure and it shows what proportion of earnings before interest and taxes (EBIT) are used to cover interest expense. It is inversed indicator to interest coverage, which is much more widely used in practice.   Calcula

Various ways how to calculate growth rate

This series provides the basic ways to determine the growth rate of certain variables (e.g. costs, GDP etc.) in the period. The series discusses these methods: average annual growth rate (AAGR) straight-line growth rate (i.e. % change of final and beginning figure) compound annual growth rate (

Purpose and objectives of financial analysis

The purpose of financial analysis is: analyze and evaluate the company's financial situation from different perspectives determine the impact of past decisions or activities compare the actual results with the financial plan, actuals, other entities, industry or national average derive tre

Time series

Time series represent a sequence of data for several time periods (hour, days, weeks, months, year). Independent variable is always time (axis x).  Time series is used to predict future and it has several components: trend – represent long-term movement;  can be developed by regre

Straight-line growth rate

Straight-line growth rate (also called as relative change, relative variance, relative difference or % change) method calculates grow rate during the considered periods of time based on the formula:  (ending value – beginning value) / beginning value   Example   2-years g

Dividend per share

Financial analysis indicator Dividend per share presents the amount of annual dividends paid per a single share.   Calculation formula     Interpretation and comparison Important is the comparison of data in time-series. If is the trend increasing, it is expected that this tre

Position audit

Position audit is continual evaluation and analysis of the company´s external and internal situation made for the purpose of strategic planning. It is possible to use various tools and analysis, for example: PESTEL analysis Five forces analysis Analysis of strategic capability SWOT analy

Reasons for paying high or low dividends

Reasons for high dividend payout: the company is trying to attract new investors company's shares are currently undervalued (16)   Reasons for low dividend payout: the company is trying to accumulate its capital for further expansion or have economic problems company's shares

Time series

Time series represent a sequence of data for several time periods (hour, days, weeks, months, year). Independent variable is always time (axis x).  Time series is used to predict future and it has several components: trend – represent long-term movement;  can be developed by regre

Budget manual

Budget manual is a document that contains instructions for budget preparation. It is often used in large companies and facilitates the budget coordination process. It is usually prepared by budget coordinators (e.g. financial analysts or controllers) and approved by budget committee. It defines mai

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