 Analyzes:
Ratio of Liabilities to Stockholders' Equity Formula Description: Analyzing the ability of a company to pay its creditors. Total Liabilities/Total Stockholder’s Equity=Ratio of Liabilities to Equity. Why is this formula important to analyze? The Ratio of Liabilities to Stockholder’s Equity is important to analyze because is measures the degree which the assets of the business are financed by the debt and the shareholders equity of the business. Both total liabilities and stockholders’ equity figures are obtained from the balance sheet of a business. Lower values of the ratio are favorable indicating less risk. Higher ratio is unfavorable because it means that the business relies more on external lenders; a higher risk. For example, let say we were analyzing Company A, B, and C.
Company A shows favorable results since there ratio is lower than the other company on the list. It shows that there assets are financed more with investors or the owner cash. Company B show unfavorable results because they are using more of a credit line to support their business. They show more of risk because they need to pay off the lenders to keep them from defaulting on their payments. Company C is doing alright since there ratio is not extremely high and show that they can continue to operate without much credit.
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 Shoebox bookkeeping is a process of throwing all financial information into a ‘shoebox’ and that at the end of the year this is given to an accountant to record for taxes. All information is thrown in that might be important to the accounting process in a box. Simply dumping the paperwork into a single place and deciding that they will address it at a later date, at which time it will likely be too late to fix problems that might arise.
This includes:
A good accounting system is critical to getting good financial information. So why don’t people always have one in place for their business? Excuses include:
No, shoebox accounting is not a good way to run the Profit end of your business. This can make it a hassle to finish and time consuming to complete.  Creating a budget for yourself or business to give you a projection of how much money you’re making and spending throughout the year can give your insight on how to maximum your cash flow and keep cost low. Why having a budget is useful:
To make sure that you have stay within the numbers of you budget you have created. I created a template to keep track of your income and expense. I made it simple to put in income and expense for each week to produce the report for each month and end of year. You can also use it without the budget just to keep track of your income and expense. Some of the benefits of keeping track of your income and expense is:
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