Times Interest Earned Ratio | Analysis | Formula The times interest earned ratio is an indicator of a corporation’s ability to meet the interest payments on its debt. The times interest earned ratio is calculated as follows: the corporation’s income before interest expense and income tax expense divided by its interest expense. The larger the times interest earned ratio, the more likely that […]
Empirical Rule | Empirical Rule Definition The empirical rule, also referred to as the three-sigma rule or 68-95-99.7 rule, is a statistical rule which states that for a normal distribution, almost all data falls within three standard deviations (denoted by σ) of the mean (denoted by µ). Broken down, the empirical rule shows that 68% falls within […]
Credit Collection Services Credit collection services are provided by collection agencies which apply a wide range of credit recovery methods. Such Credit recovery are used for successful collection of outstanding receivables and bad debts. The DCAs (Debt Collection Agencies) serve different industries in order to provide professional help for businesses. Such agencies supply these businesses with a range of high-quality […]
Depreciation Expense It is important to analyze how company’s use depreciation, which can represent a significant portion of the expenses on a firm’s income statement, and which can impact the value of an investment opportunity in the short term. While there are rules governing how to expense depreciation, there is still plenty of wiggle room for management to […]
What is Gross Revenue and How to Calculate? Gross revenue is the total amount of sales recognized for a reporting period, prior to any deductions. This figure indicates the ability of a business to sell goods and services, but not its ability to generate a profit. Deductions from gross revenue include sales discounts and sales returns. When these deductions are netted against […]