|
Overtrading
Overtrading is a term in financial statement analysis. Overtrading often occurs when companies expand their own operations too quickly (aggressively). Overtraded companies enter a negative cycle, where an increase in interest expenses negatively impacts the net profit, which leads to lesser working capital, and that leads to increased borrowings, which in turn leads to interest expenses and the cycle continues. Overtraded companies eventually face liquidity problems and can run out of working capital. Conditions * Rapid growth in business development and sales. * Less net profit. * The business running with limited knowledge. * Cash flow problem or short of working capital. * Inaccurate or unrealistic cash budget . * Having many unpaid vendors. * High level of interest / debt servicing costs. * High gearing ratio. * Keen market competition. * Overstock or slow movement of inventory. * Current and quick ratios fall. Alternative retail definition In retail contexts, the term "ove ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Working Capital
Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital. A company can be endowed with assets and profitability but may fall short of liquidity if its assets cannot be readily converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receiv ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs. For example, a customer would usually pay interest to borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited. In the case of savings, the customer is the lender, and the bank plays the role of the borrower. Interest diff ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Profit
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period. It is computed as the residual of all revenues and gains less all expenses and losses for the period,Stickney, et al. (2009) Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning and has also been defined as the net increase in shareholders' equity that results from a company's operations.Needles, et al. (2010) Financial Accounting. Cengage Learning. It is different from gross income, which only deducts the cost of goods sold from revenue. For households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension contributions). Definition Net income can be distributed among holders of common stock as a dividend or h ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accounting Liquidity
In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities. Liquidity is the ability to pay short-term obligations. Calculating liquidity For a corporation with a published balance sheet there are various ratios used to calculate a measure of liquidity. These include the following: * The current ratio is the simplest measure and calculated by dividing the total current assets by the total current liabilities. A value of over 100% is normal in a non-banking corporation. However, some current assets are more difficult to sell at full value in a hurry. * The quick ratio is calculated by deducting inventories and prepayments from current assets and then dividing by current liabilities, giving a measure of the ability to meet current liabilities from assets that can be readily sold. A better way for a trading corporation to meet lia ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cash Flow
A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected to happen in the future, are thus uncertain and therefore need to be forecast with cash flows; *a cash flow is determined by its time ''t'', nominal amount ''N'', currency ''CCY'' and account ''A''; symbolically ''CF'' = ''CF''(''t,N,CCY,A''). * it is however popular to use ''cash flow'' in a less specified sense describing (symbolic) payments into or out of a business, project, or financial product. Cash flows are narrowly interconnected with the concepts of value, ''interest rate'' and liquidity. A cash flow that shall happen on a future day ''t''N can be transformed into a cash flow of the same value in ''t''0. Cash flow analysis Cash flows are often transformed into measures that give information e.g. on a company's value and situat ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Budget
A budget is a calculation play, usually but not always financial, for a defined period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environmental impacts such as greenhouse gas emissions, other impacts, assets, liabilities and cash flows. Companies, governments, families, and other organizations use budgets to express strategic plans of activities in measurable terms. A budget expresses intended expenditures along with proposals for how to meet them with resources. A budget may express a surplus, providing resources for use at a future time, or a deficit in which expenditures exceed income or other resources. Government The budget of a government is a summary or plan of the anticipated resources (often but not always from taxes) and expenditures of that government. There are three types of government budget: the operating or current budget, the capital or investment budget, a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gearing Ratio
The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known as risk, gearing or leverage. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly traded, or using a combination of book value for debt and market value for equity financially. Usage Preferred stock can be considered part of debt or equity. Attributing preferred shares to one or the other is partially a subjective decision but will also take into account the specific features of the preferred shares. When used to calculate a company's financial leverage, the debt usually includes only the Long Term Debt (LTD). Quoted ratios can even exclude the current portion of the LTD. The composition of eq ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Competition
In economics, competition is a scenario where different Economic agent, economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm. are in contention to obtain goods that are limited by varying the elements of the Marketing mix for product software, marketing mix: price, product, promotion and place. In classical economic thought, competition causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater the selection of a good is in the market, prices are typically lower for the products, compared to what the price would be if there was no competition (monopoly) or little competition (oligopoly). The level of competition that exists within the market is dependent on a variety of factors both on the firm/ seller side; the number of firms, barriers to entry, infor ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shape and placement of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The concept of inventory, stock or work in process (or work in progress) has been extended from manufacturing systems to service businesses and projects, by generalizing the definition to be "all work within the process of production—all work that is or has occurred prior to the completion of production". In the context of a manufacturing production system, inventory refers to all work that has occurred—raw materials, partially finished products, finished products prior to sale and departure from the manufacturing system. I ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers. Retail markets and shops have a very ancient history, dating back to antiquity. Some of the earliest retailers were itinerant peddlers. Over the centuries, retail shops were transformed from little more than "rude booths" to the sophisticated shopping malls of the modern era. In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also affecting the way that consumers pay for goods and services. Retailing support services may also include the provision ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Aldi
Aldi (stylised as ALDI) is the common company brand name of two German multinational family-owned discount supermarket chains operating over 10,000 stores in 20 countries. The chain was founded by brothers Karl and Theo Albrecht in 1946, when they took over their mother's store in Essen. The business was split into two separate groups in 1960, that later became Aldi Nord, headquartered in Essen, and Aldi Süd, headquartered in Mülheim. In 1962, they introduced the name Aldi (a syllabic abbreviation for Albrecht Diskont), which is pronounced . In Germany, Aldi Nord and Aldi Süd have been financially and legally separate since 1966, although both divisions' names may appear as if they were a single enterprise with certain store brands or when negotiating with contractor companies. The formal business name of Aldi Nord is Aldi Einkauf GmbH & Co., while the formal business name of Aldi Süd is ALDI SÜD Dienstleistungs-SE & Co. Each company is owned and operated independently, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
IKEA
IKEA (; ) is a Dutch multinational conglomerate based in the Netherlands that designs and sells , kitchen appliances, decoration, home accessories, and various other goods and home services. Started in 1943 by Ingvar Kamprad, IKEA has been the world's largest furniture retailer since 2008. The brand used by the group is derived from an acronym that consists of the founder's initials, and those of Elmtaryd, the family farm where he was born, and the nearby village Agunnaryd (his hometown in Småland, southern Sweden). The group is primarily known for its modernist designs for various types of appliances and furniture, and its interior design work is often associated with simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development that has allowed IKEA to lower its prices by an average of two to three percent. , there are 422 IKEA stores operating in 50 countries and in fiscal year 2018, €38.8 billion ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
