It’s a bit dangerous to propose that the income statement of a business can be simplified. If you were to make a business decision (stock purchase, buy a business, etc.) just from this idea, you could find yourself in a heap of trouble financially. However, simplifying the income statement is a good place to start your […]
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Did you know the US Government teaches financial statements? Now, before you get to excited, the information given on the governments website is basic. But, it’s certainly enough to gain an understanding of the subject.Part of our taxpayer money is maintaining the Securities and Exchange Commission. This is the government body that is responsible for […]
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I often hear the advice that younger people should take on more financial risk. They have more time to recover, so the thinking goes. But, this advice is nonsense. In this article, I will bust the myth that young people should take on more financial risks.Young People Make Less MoneyWhen you first started out in […]
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With the exception of a mortgage, you should get out of debt before investing. Loans types other than mortgages detract from your investing returns.Within this article, I will refer to debt as credit card debt, car loans, and personal loans. Because mortgage rates are low enough, it’s possible to carry a mortgage while investing, and […]
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Have you ever heard of the Plunge Protection Team? It was created as part of an executive order passed by President Ronald Reagan in March 1988. The official name of this executive order is the President’s Working Group on Financial Markets. Many believe its purpose is more insidious than the official intention of the group […]
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When you play sports, it’s likely that you will receive instructions from a coach. The subject of accounting is so complex, that it is probably wise to learn via a coach. Therefore, if you are asking do you need an accounting coach, the answer is yes, you do. Website: AccountingCoach.comOwner: Harold Averkamp CPA, MBACost: Three […]
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Do you know what opportunity cost means? How about the impact of opportunity cost? Is this something you should concern yourself with? The truth is if you don’t consider this concept, it could cost you significant amounts of missed opportunities.People avoid the concept of opportunity cost because it’s abstract. It’s not something that is published […]
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Analysts love the Return on Equity (ROE) ratio and with good reason. A high ROE usually signifies a great company. Therefore, you may be tempted to use a stock screener and plug in a high number for the ROE and use the results as your list of companies to invest in.The problem is the ROE […]
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In a previous article, I wrote about how the Quick Ratio works and how it can be used by investors. It has its uses, but it isn’t always effective in determining companies that are in trouble financially (which is one of its purposes). However, there is a subtle benefit of the Quick Ratio: it may […]
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You and your spouse celebrate the fact that you’ll no longer have to shell out bucks every month for your mortgage payment. You’ve managed to pay it off early and good for you! That’s a big chunk of your expenses each and every month that you no longer have to pay. Suppose you learn that your […]
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