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Acid Test Ratio Investors calculate the acid test ratio, also known as the quick or pounce ratio. This ratio excludes inventory and prepaid expenses, which the current ratio includes, and it limits assets to cash and items that the business can quickly convert to...

The dividend yield ratio tells investors how much cash income they're receiving on their stock investment in a business. This is calculated by dividing the annual cash dividend per share by the stock's current market price. You can compare this with the interest rate...

A public corporation is a business whose securities are traded on the public stock exchanges, such as the New York Stock Exchange and Nasdaq. A private company is held solely by its owners and is not traded publicly. When the shareholders of a private business receive...

The price earnings (P/E) ratio is another measurement of particular interest to investors in public businesses. The P/E ratio gives you an idea of how much you're paying at the current price for stock shares for each dollar of earning. Earnings prop up the market...

Publicly owned companies must report earnings per share (EPS) below the net income line in their income statements. This is mandated by generally accepted accounting practices (GAAP). The EPS gives investors a means of determining the amount the business earned on its...

Its obvious financial statements have a lot of numbers in them, and at first glance, it can seem unwieldy to read and understand. One way to interpret a financial report is to compute ratios, dividing a particular number in the financial report by another. Financial...

The first and most important part of an income statement is the line reporting sales revenue. Businesses need to be consistent regarding recording sales from year to year. For some businesses, the timing of recording sales revenue is a significant problem, primarily...

Measuring profits or net income is the essential thing accountants do. The second most important task is measuring costs. Costs are significant to running a business, and managing them effectively can make a substantial difference in its bottom line. Any business that...

Financial statements are the backbone of a complete financial report. A financial report is incomplete if the three primary financial statements are not included. But a financial report is much more than just those statements. A financial report requires disclosures....