Other potential causes include changes in technology, raw material costs, and production processes. The more Direct Labor Mix Variance is decreased, the less wasted resources are on production, and the better chance there is that products will be produced within their optimal amount of time. Note that in contrast to direct labor, indirect labor consists…

Total return on equity is the profitability, multiplied by the rate of asset turnover, multiplied by the ratio of assets to equity (leverage). By identifying each component and evaluating, strength and weakness can be evaluated, as well as insight into competitive advantage. Understanding how each element leads to return on equity will help a researcher…

Investors and analysts use ratio analysis to evaluate the financial health of companies by scrutinizing past and current financial statements. For example, comparing the price per share to earnings per share allows investors to find the price-to-earnings (P/E) ratio, a key metric for determining the value of a company’s stock. Financial ratios analysis is the…

Publishing a classified balance sheet also makes it easy for regulators to point out an issue in the initial stages rather than in the final stages when irrevocable damage has already been done. It shows the value of the company’s ownership after all debts are paid. It’s important for users of a classified balance sheet…

The rules, regulations and requirements of financial reporting also have a lot of influence on these statements. Long term investments are assets which can be converted in to cash after a year. For example investment in another company by means of stock or bonds or investment in real estate. Categorizing Liabilities into Current and Long-Term…