Normal spoilage is the amount of product that is lost or damaged during the production process that is considered to be within the normal range of expected losses. This can be due to a variety of factors, including equipment malfunctions, human error, or natural disasters. Normal spoilage is typically covered by insurance, and is not … Read more
In corporate finance, a company’s Series B financing is the second stage of venture capital financing. The Series B round is usually raised after a company has completed its initial public offering (IPO), and is used to help a company grow its business. Series B financing is typically used to help a company expand its … Read more
Overcapitalization is a situation where a company has raised more capital than it requires to fund its operations, growth, and other investments. The excess capital is typically used to finance acquisitions, pay dividends, or repurchase shares. Overcapitalization can lead to a company being unable to generate sufficient returns to cover its cost of capital, which … Read more
In order to understand profit centers, one must first understand the concept of a “center.” A center is defined as a location, person, or thing around which something else is organized or arranged. In business, a profit center is a business unit within a company that is responsible for generating profits. The profit center is … Read more
Contingency is an undefined future event or condition that, if it occurs, could have a material impact on a company’s financial condition, operating performance, or cash flows. For example, a company may be involved in a lawsuit that could have a negative outcome, or it may be relying on a new product launch to drive … Read more
A credit sweep is a financial arrangement in which a company’s excess cash is used to pay down its outstanding debt. The excess cash is swept from the company’s account on a regular basis and applied to the outstanding debt, which reduces the amount of interest that the company must pay. This arrangement can be … Read more
A time draft is a demand for payment that is typically used in international trade transactions. The draft includes instructions from the drawer (the party who initiates the draft) to the drawee (the party who is instructed to pay the draft) specifying when the draft is to be paid. Payment may be made on the … Read more
An asset acquisition strategy is a plan that a company uses to identify and acquire assets that will help the company grow and achieve its business goals. The strategy should be aligned with the company’s overall business strategy. There are a few different ways that a company can acquire assets. The most common method is … Read more
Whole-life cost is the total cost of ownership of an asset over its entire lifetime. This includes the initial purchase price, as well as the costs of operating and maintaining the asset. It also takes into account the costs of disposing of the asset at the end of its useful life. Whole-life cost analysis is … Read more
The adjusted balance method is a way of calculating interest on a credit card balance. With this method, the interest is calculated based on the cardholder’s average daily balance, including any new purchases and payments made during the billing cycle. The advantage of this method is that it gives cardholders a grace period on new … Read more
