Operating cash flow is the cash generated from a company’s regular business operations. It signifies a businesses’ ability to generate sufficient revenue to cover operational expenses and maintain profitability. It’s a key indicator of a business’ financial health and operational efficiency. Cash Flow Analysis Mismanaging finances or miscalculating cash flow […]
Since Speakers, Inc. doesn’t have $500,000 in cash to pay for a building, it must take out a loan. Speakers, Inc. purchases a $500,000 building by paying $100,000 in cash and taking out a $400,000 mortgage. This business transaction decreases assets by the $100,000 of cash disbursed, increases assets by […]
For instance, if a business takes a loan from a bank, the borrowed money will be reflected in its balance sheet as both an increase in the company’s assets and an increase in its loan liability. The accounting equation states that a company’s total assets are equal to the sum […]