Fundamental analysis is used to estimate a true value of an asset such as a company or a stock. Financial statements prepared by accountants and tested by auditors are used extensively in fundamental analysis.

Differences between accounts payable (balance sheet) and expenses (income statement) are sometimes confusing. In this article, we will discuss such differences and show how the two types of accounts can be connected in a journal entry.

Out-of-balance items play an important role in the determination of the financial health of a company. Being harder to track, they can become hidden traps aimed to artificially improve the company’s financial position and performance. In this article we will describe the main types of out-of-balance transactions and provide approaches to accounting for the most common ones.

In the highly competitive market conditions enterprises are forced to increase their profitability. In this article we will review the impact of inventory on financial results of a company

All businesses are not created equally. Apple and Google have massive operations in multiple geographic regions across the world, while a small manufacturing company might only own a single factory in Michigan. Should these three companies produce the exact same financial statements? In this article, we’ll look at how diversified companies are required to report operating segment results.

Owning a share of stock in a company might earn you a few dollars, but you don’t get to do a whole lot of decision-making as such a small investor. Corporations, on the other hand, invest in equity securities on a much larger scale. In this article, we’ll look at three different methods of accounting for stock investments.

What would happen to a corporation if the long-term CEO were to die? Some businesses carry life insurance policies for just such an event because of potential operation disruptions. In this article we’ll discuss briefly the journal entries for business-owned life insurance (BOLI) policies.

In part 1 of this series, we learned how to calculate the cost of different forms of financing -- debt, preferred equity, and common equity. In this article, we’ll cover some ways that information can be used to make sound business decisions.

In this two-part article series, we will discuss how to calculate a firm’s cost of capital. This is an important measurement with several business applications. We’ll go over the basic concepts below - the second part will focus on the practical applications.

In the first article of this series, we gave an overview of standard financial statements and additional disclosures and notes to the statements that a corporation produces on a periodic basis. In this article, we’ll touch on official reports that must be filed with the Securities and Exchange Commission by public companies.