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Companies with strong net income figures might reinvest in expansion, innovation, or dividend payouts to shareholders. On the other hand, businesses facing declining net income may need to adjust strategies, such as cutting costs, restructuring debt, or refining pricing models, to improve profitability. Also known as overhead, SG&A expenses are the costs of running a

Hence, monitoring changes in net working capital helps business owners, investors, and creditors evaluate the company’s risk, manage their resources effectively, and make strategic decisions. Put together, managers and investors can gain critical insights into a business’s short-term liquidity and operations. Imagine that in addition to buying too much inventory, the retailer is lenient with

When it comes to preparing cash flow statements, two commonly used methods are the direct method and the indirect method. In this blog post, we will explore the differences between these two approaches and understand their implications for financial reporting. A company’s cash flow statement reflects its financial performance over a specific period. The direct