Accounting

Meaning of Nominal Cost of Capital The nominal Cost of Capital is inclusive of Inflation. It means the Nominal cost of capital calculation is without adjustment of general Inflation. In comparison to the real cost of capital, it comes after the adjustment of general inflation. The cost of Capital is important for reviewing the organization’s […]

Meaning of Gross and Net Gross means the total of something while net means part of any whole item after certain deductions. Gross represents whole structure while net reflects balancing figure. For example, a company had revenue of $100 million while the expenses are $70 million so in that case, $100 million is known as

Meaning of controllable profits For managerial evaluation, there are different responsibility centers inside any organization. These include revenue center, profit center, cost center, and investment center. Controllable profits are a concept wherein the performance of divisional managers is evaluated based upon the responsibility center in which they have been assigned. Controllable profits mean revenue minus

Meaning It means inflating the amount in a budget so that any unexpected cost of the project can be recovered in the future while executing the projects. It is a method of artificially increasing the amount in expected project cost. It’s a deliberate process where the actual forecast by the budget preparer differs from the

Meaning of policy Policies are documented steps necessary for an organization, individuals, or group of individuals to ensure that the organization’s overall goals are being achieved. Many times policies may involve certain sets of decisions to ensure solving a long-term purpose for any particular problem. Policies simply outline what needs to be done, who is

Introduction In the past, it had been well seen that recessions and credit crunch may lead to the non-availability of cash reserves to the companies even though they may have some prospective business opportunities. This creates a mismatch between demand and supply of funds for business buyers and sellers. These situations have given rise to

Cost Leadership Meaning When a company has the lowest cost for running its business operations compared to its peers, it is known as cost leadership for the company. This cost leadership arises due to the company’s scale of operations, the efficiency of operations, the size of the company, and the overall learning curve rate for

What is a Consignment Inventory? Consignment inventory refers to an inventory arrangement that results from an agreement. This agreement mostly specifies that one party must hold inventory for another party for a specific purpose. In this regard, the main objective of the holder is to sell the inventory on the behalf of the initial owner

Economy Pricing Strategy can be defined as a method of pricing which involves a lower price assigned to a product as a result of decreased production costs. This pricing strategy is adopted by businesses in order to make generic and commodity-related products more consumer-centric in terms of lower prices. The main rationale is to provide

Definition of Portfolio at Risk Portfolio at Risk can be defined as a ratio that is mostly used in microfinance institutions, or banks in order to measure the quality of loans, as well as the risk that exists on the financial statements pertaining to these recoverable. Portfolio at Risk is considered to be an important