Current liabilities, also known as short-term liabilities, are the summation of a company’s debts, financial obligations, and accrued expenses that appear on its balance sheet and are due within twelve months. Examples of current liabilities include accounts payable, short-term loans, accrued expenses, taxes payable, unearned revenues, and current portions of long-term debt. Current Liabilities Formula…
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Small Business Maternity Leave Policy & Laws – With Examples
Under the federal Family & Medical Leave Act (FMLA), employers with 50 or more employees must provide new and adoptive moms up to 12 weeks to care for themselves and their infant. Although FMLA only requires employers to offer unpaid leave, some also choose to offer paid maternity leave. This article covers both federal and…
Bad Debt Expense: Everything You Need to Know About Uncollectible Accounts
Bad debt expense is money that you are not able to collect from outstanding customer invoices. When an invoice is more than 90 days overdue businesses typically write it off as uncollectible bad debt. This will increase expenses on the profit and loss statement and decrease accounts receivable on the balance sheet by the same…
Blanket Mortgage Fundamentals: Rates, Terms, Qualifications and More
A blanket mortgage enables real estate investors to buy, hold, and sell multiple properties under a single financing arrangement, which is more efficient than having multiple individual mortgages. With a blanket loan, properties can be sold without triggering the “due on sale,” which allows proceeds from the sale to be used to purchase more property….
What Is The FIFO Inventory Method? First In, First Out Explained
First in First out, also known as the FIFO inventory method, is one of five different ways to value inventory. FIFO assumes that the oldest items purchased are sold first. FIFO is best for businesses that sell perishable food/drink items or products that have an expiration date like certain medications. In this article, we will…
What is the Loan-to-Cost (LTC) Ratio: How to Calculate & LTC Formula
The loan-to-cost ratio (LTC) measures the percentage of a property’s acquisition, rehab, and construction costs that’s financed by a loan. It is typically used for commercial mortgages, fix-and-flip loans, and construction loans. The LTC helps investors set budgets for their down payment and expected monthly payments and calculate potential profits. Loan-to-Cost Ratio (LTC) Formula Calculating…
What is Loan-to-Value (LTV) Ratio: How to Calculate & LTV Formula
The loan-to-value (LTV) ratio measures the percentage of a property’s value that’s being financed with a loan. Lenders typically set maximum LTV rates, which are often used by investors and homebuyers when budgeting for a project. The maximum LTV rates available to a borrower are based on the specific loan type, lender, as well as…
What is After Repair Value: How to Calculate + ARV Formula
The after repair value (ARV) estimates the future value of a distressed property after it’s been repaired. ARV is not a property’s current value when purchased but rather the estimated value of the property once improvements are made. ARV is commonly used by fix and flip investors who purchase, renovate, and sell properties within 1…
What Is A Cooperative? And How Do You Start One?
A cooperative, or co-op, is an organization owned and controlled by the people who use the products or services the business produces. Cooperatives differ from other forms of businesses because they operate more for the benefit of members, rather than to earn profits for investors. Cooperative businesses can be as small as a community buying…
What is Net Promoter Score (NPS) & How Is It Calculated?
Net Promoter Score is a customer loyalty metric that businesses use to gauge how their customers feel about them. Here’s how to calculate your NPS.
What is a Corporation & How Do You Form One?
A corporation is a type of business structure and legal entity that is declared separate from its owners and shareholders. Corporations enjoy similar rights to a person, such as entering into contracts, owning assets, loaning money and hiring. It has these capabilities without the risk of being personally liable for business debts or legal obligations…
What is a Profit and Loss Statement & Why Is It Important?
A profit and loss statement, otherwise known as a P&L or income statement, is a document that measures and reports a company’s expenses and revenue during a specific period of time. This shows a company’s financial status and progress during the time surveyed. The statement details a company’s capability to create profit by driving revenue,…