What are Professional Corporations? A professional corporation is a corporation that comprises different types of professionals such as doctors, lawyers, architects, accountants, engineers, psychologists, etc. In most states, professionals who want to incorporate their practice can do so by forming a professional corporation or a professional service corporation. A professional service corporation is different from…
What are Public Companies? Public companies are entities that trade their stocks on the public exchange market. Investors can become shareholders in a public company by purchasing shares of the company’s stock. The company is considered public since any interested investor can purchase shares of the company in the public exchange to become equity owners….
What are Fidelity Bonds? Fidelity bonds are designed to protect their policyholders from any loss that occurs as a result of harmful or deceitful actions by specifically indicated parties. In most cases, fidelity bonds are used to protect corporations from the actions of dishonest employees. Despite the fact that they are called bonds, fidelity bonds…
What is the International Bank Account Number (IBAN)? The International Bank Account Number – typically referred to as IBAN – is a system of identification for bank accounts that is used across national borders. Internationally agreed upon, the IBAN system acts as a facilitator for communicating and processing international transactions, helping to reduce errors in…
What is a Residual Dividend Policy? A business with a residual dividend policy holds zero excess cash at any given point in time. All spare cash must be either reinvested in the business or redistributed among the shareholders. Imperfections in the capital market make it rare for a company to follow a pure residual dividend…
What is the Compound Interest Formula? To start, it’s important to understand first what compound interest is. Compound interest is taken from the initial – or principal – amount on a loan or a deposit, plus any interest that already accrued. The compound interest formula is the way that such compound interest is determined. Compound…
What is the Fisher Equation? The Fisher equation is a concept in economics that describes the relationship between nominal and real interest rates under the effect of inflation. The equation states that the nominal interest rate is equal to the sum of the real interest rate plus inflation. The Fisher equation is often used in…
What is Managerial Finance? Managerial finance is concerned more with the assessment of financial techniques versus the financial techniques themselves. It differs from the technical approach, which essentially only concerns itself with measurement and whether money’s been assigned to the correct categories. The managerial approach aims to determine the significance of data, figures, and numbers….
What is Average Cost of Production? Average cost of production refers to the per-unit cost incurred by a business to produce a product or offer a service. Production costs may include things such as labor, raw materials, or consumable supplies. In economics, the cost of production is defined as the expenditures incurred to obtain the…
What are Efficiency Ratios? Efficiency ratios are metrics that are used in analyzing a company’s ability to effectively employ its resources, such as capital and assets, to produce income. The ratios serve as a comparison of expenses made to revenues generated, essentially reflecting what kind of return in revenue or profit a company can make…
