Difference between Cash discount And Trade discount Goal of each and every company in the market is to gain profit within a stipulated amount of time. In order to ensure the amount of profit, it is necessary to increase product sales. Diverse ranges of techniques are utilized for profit. Discounts, advertisements and new products are… Read More »
FOB shipping Vs FOB destination FOB stands for Free on Board In case of international trade, terms like FOB or Free on board shipping and FOB destination are noticed. It helps to determine the goods title that is generally transferred from a seller to a buyer. Through the FOB shipping point, indication is given that… Read More »
Book Value vs Market Value For the purpose of investment, it is important to know the difference between book value and market value. There is no doubt in the fact that it is one of critical aspects of business. The process is simple and yet complicated. While investing in a company, you have to know… Read More »
Systematic Risk vs Unsystematic Risk Risk Analysis in Capital Budgeting Diverse ranges of risks are present in the process of investment. In case the capital is lost completely then you may have come across at high amount of risk. To eliminate the risk from the process of investment, you must go with an investment risk… Read More »
After-Tax Cost of Debt There is a part in the WACC formula – r (D) × (1 – t) that stands for after-tax cost of debt. The debt holders must earn this after-tax rate of return till the debt reaches to maturity. The cost of debt formula of a company should be based on the… Read More »
Cost of Equity The cost of equity is the rate of return required on the common stock of a company. This minimum rate of return is essential for the company to earn so that it prevents its common stocks price from falling. There are several models such as capital asset pricing model (CAPM) and dividend discount… Read More »
Weighted Average Cost of Capital Weighted average cost of capital Weighted average cost of capital (WACC) means to the average amount of minimum rate of return after paying the tax that a company must bring home for its all security holders including debt holders, common stockholders, and preferred stock holders. How to Calculate WACC? The… Read More »
Revenue Expenditure Revenue expenditure refers to the cost that is obliged to spend immediately after the cost is earned. By following this matching principle, it is possible for a business to link up the incurred expenses to the generated revenues within the same accounting term. Thus, a correct income statement result can capitulate. Usually, revenue… Read More »
What is a hurdle rate? Hurdle rate refers to the lowest amount of rate that a company is likely to earn from the investment in a project. Therefore, in capital budgeting, hurdle rate is also recognized as the target rate or required rate of return of that company. It is essential for a project as… Read More »
What is a long-term asset? The asset that cannot be turned into cash and needs to be consumed within a specific duration of one year from the date mentioned in the heading a balance sheet is considered as a long-term asset. However, when a company follows an operating cycle longer than one year, there is… Read More »