Discounted Bills – Meaning

Discounted bills are bills (Bill of exchange or Promissory notes) sold by corporates to banks or credit institutions to raise fund. These bills are sold at discounted price than the par value. The discounted amount then credited to the seller’s account. At the date of maturity, bank collects the amount from customer on behalf of…


Accounts receivable – Definition

Accounts receivable refers to the amount of money which a company has to collect from its debtors. The money so owed by customers is assumed to be collected within a financial year. Thus account receivable is part of currect asests of a company. Usually accounts receivable occurs as a result of credit sale policy adopted…


Cost Of Goods Sold

Cost Of Goods Sold (COGS) represents the actual cost incurred in manufacturing of goods, sold by a company within a period. It is calculated by adding opening stock and purchases made during the same financial year and then subtracting the amount of closing stock. Formula for calculating Cost Of Goods Sold:  COGS = (Opening stock…


Return on assets (ROA)

Return on assets (ROA) is one of the profitability ratios which shows the relationship between net income and total assets of a company. It is used to measure the efficiency of a company to generate profit by deploying its assets. A higher degree of this ratio is always considered good and shows the strength of…


Working capital turnover ratio

Working capital turnover ratio shows the relationship between net sales and working capital of a company. One of the important sales ratios, working capital turnover ratio is used to gauge the efficiency of management to increase sales by using working capital of company. The higher degree of this ratio reflects better usage of working capital.…