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What Does ‘Invested Capital’ Mean?
What Is Invested Capital? Invested capital is the total amount of money a company has put toward long-term activities including buying fixed assets, investing in intangible assets, making capital improvements, or entering into long-term debt agreements. It is essentially a measure of how much a company has spent to acquire and maintain assets. When a…
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What Does ‘Gross Profit’ Mean?
What Is Gross Profit? Gross profit is an important measure of a company’s financial performance, and is a basic accounting measure used to calculate profitability. Put simply, it is a calculation that shows the difference between total sales (revenue) and the cost of goods sold. Gross profit is calculated by subtracting the costs directly related…
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What Does ‘Inventory Turnover Ratio’ Mean?
What Is an Inventory Turnover Ratio? Inventory turnover ratio is a calculation that measures a company’s ability to sell stock and manage inventory in a given period. It measures the number of times that a company’s inventory is sold and replaced over a specific time period. The higher an inventory turnover ratio, the better it…
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What Does ‘Current Ratio’ Mean?
What Is the Current Ratio? The current ratio is an important financial metric that measures a company’s ability to pay its short-term obligations, such as accounts payable and debt. It is calculated by dividing a company’s total current assets by its total current liabilities. A current ratio of 1.00 or greater is generally considered a…
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What Does ‘YOY’ Mean?
What Does YOY Mean? When it comes to understanding business and finance terms, there can be a lot of jargon and acronyms being thrown around that may be unfamiliar to your average college student. One such acronym is YOY, which stands for year-over-year. In this article, we will define YOY and provide examples of how…
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What Does ‘Waiver of Subrogation’ Mean?
What Is Waiver of Subrogation? A waiver of subrogation is an agreement between two or more parties, which releases a party from any potential claim related to coverage that is transferred from one to another. In other words, it relieves the potential recipient of any responsibility of having to compensate the other for any losses.…
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What Does ‘W-8Ben-E’ Mean?
What Is the W-8Ben-E Form? The W-8Ben-E form is an important document used in international business and finance. It is used to provide the U.S. Internal Revenue Service (IRS) with information about nonresident shareholders when companies are filing their taxes. In other words, it’s a way for companies to report income that a nonresident investor…
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What Does ‘VWAP’ Mean?
What Does VWAP Mean? If you’re taking a business or finance class, you may have heard the term VWAP, but what does VWAP mean? VWAP stands for Volume Weighted Average Price. It is an important concept in investing and trading that can help investors maximize returns by comparing the current prices of securities or commodities…
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What Does ‘Unrealized Loss’ Mean?
What Is an Unrealized Loss? An unrealized loss is an anticipated loss due to a decline in the value of an asset before it is sold for cash. It is also known as a paper loss, as no actual cash exchange occurs. An unrealized loss is only recognized when the asset is sold, and thus…
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What Does ‘Trimmed’ Mean?
What Does Trimmed Mean? Trimming is a common cost-cutting practice in the business world. It is a technique that eliminates or reduces expenses to gain more profit. Trimming can include reducing staff, materials used, or other matters that a business may have control over. Trimming can also refer to the practice of reducing the size…
