Here we can see the beginning balance of its retained earnings (shown as reinvested earnings), the net income for the period, and the dividends distributed to shareholders in the period. Assuming your business pays its shareholders dividends (stock or cash),…

Hence, it is also known as the profit investment ratio (PIR), value investment ratio (VIR), or benefit-cost ratio (BCR). Companies and investors operate on the principal business tenet of maximizing the return on invested capital (we talked about this concept…

The Accounting Equation is the foundation of double-entry accounting because it displays that all assets are financed by borrowing money or paying with the money of the business’s shareholders. The purpose of the accounting equation is that it lays the…

For example, if a piece of heavy machinery is purchased for $10,000, that $10,000 figure is maintained on the general ledger even as the asset's depreciation is recorded separately. Showing contra assets on your balance sheet allows potential investors to…