What is Modified Accrual Accounting? Modified accrual accounting refers to an accounting method that combines cash-basis accounting and accrual-basis accounting. It follows the cash-basis method to record short-term events and follows the accrual method to record long-term events. The modified accrual method of accounting is created by the Government Accounting Standards Board (GASB). It does…
What is Minimum Wage? Minimum wage is the lowest wage that companies are obliged to give their employees for work performed over a certain period. It is the legal wage that cannot be reduced further by any contract or mutual agreement. The hourly minimum wage rate can be determined by the legislative body, wage board,…
What is Mom-and-Pop? The term mom-and-pop describes the small business entities that are independent or family-owned. It is in contrast to big-box stores, such as Walmart, Home Depot, Starbucks, and Pizza Hut. Mom-and-pop stores comprise a wide variety of businesses, including restaurants, groceries, repair shops, etc. Under the investment concept, mom-and-pop can also be used…
What is Top-Down Analysis? Top-down analysis starts by analyzing macroeconomic indicators, then performing a more specific sector analysis. Only after that does it dive into the fundamental analysis of a specific firm. It is the opposite of bottom-up analysis, which focuses on looking at fundamentals or key performance indicators before anything else. Breaking…
What is Strategic Analysis? Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate a strategy. The definition of strategic analysis may differ from an academic or business perspective, but the process involves several common factors: Identifying and evaluating data relevant to the company’s strategy Defining the internal…
What is Threat of New Entrants? The Threat of New Entrants, one of the forces in Porter’s Five Forces industry analysis framework, refers to the threat that new competitors pose to current players within an industry. It is one of the forces that shape the competitive landscape of an industry, and it helps determine the attractiveness…
What is Industry Analysis? Industry analysis is a market assessment tool used by businesses and analysts to understand the competitive dynamics of an industry. It helps them get a sense of what is happening in an industry, e.g., demand-supply statistics, degree of competition within the industry, state of competition of the industry with other emerging…
What is a Mission Statement? A mission statement is a precise statement that defines what a company does and what purpose it serves. It is generally a short, 1-2 sentence statement that may incorporate the company’s corporate strategy and long-term vision. Examples of a Mission Statement Microsoft’s mission statement Microsoft is an American multinational company…
What is the First Mover Advantage? The first-mover advantage refers to an advantage gained by a company that first introduces a product or service to the market. The first-mover advantage enables a company to establish strong brand recognition and product/service loyalty before other entrants to the market. It is important to note that the first-mover…
What is External Analysis? External analysis means examining the industry environment of a company, including factors such as competitive structure, competitive position, dynamics, and history. On a macro scale, external analysis includes macroeconomic, global, political, social, demographic, and technological analysis. The primary purpose of external analysis is to determine the opportunities and threats in an…
