Accounting

Degree of Financial Leverage (DFL)

Degree of Financial Leverage (DFL)

The degree of financial leverage is a financial ratio that measures the sensitivity in fluctuations of a company’s overall profitability to the volatility of its operating income caused by changes in its capital structure. It is the relationship between percentage change in earnings per share a.....

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Degree of Operating Leverage (DOL)

Degree of Operating Leverage (DOL)

The degree of operating leverage (DOL) is a multiple that measures how much the operating income of a company will change in response to a change in sales. Operating leverage measures the percentage change in operating profit with respect to changes in the sales. The DOL ratio assists analysts in.....

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Degree of Combined Leverage (DCL)

Degree of Combined Leverage (DCL)

The degree of operating leverage measures the effects that operating leverage has on a company’s earnings potential and indicates how earnings are affected by sales activity. The combination of operating leverage and financial leverage is called combined leverage or total leverage. The degr.....

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Features of Amalgamation

Features of Amalgamation

Features of Amalgamation Amalgamation is defined as a combination of one or more companies into a new entity. It is an arrangement where two or more companies consolidate their business to form a new firm or become a subsidiary of any one of the companies. It is one of the tools that can help com.....

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Internal reconstruction

Internal reconstruction

Internal reconstruction External reconstruction is one in which the company undergoing reconstruction is liquidated to take over the business of an existing company. In the case of internal reconstruction, the losses of the company can be set off against the future profit of the company. It focus.....

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External Reconstruction

External Reconstruction

External Reconstruction Reconstruction is a process of the company’s reorganization, concerning legal, operational, ownership, and other structures, by revaluing assets and reassessing the liabilities. External reconstruction takes place when an existing company goes into liquidation for the ex.....

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Concept of Reconstruction in Accounting

Concept of Reconstruction in Accounting

Concept of Reconstruction in Accounting Reconstruction is an exercise of restating assets & liabilities by a company/entity whose financial position as reflected by its balance sheet is not healthy but the future is promising. When a company is suffering loss for several past years and suffer.....

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Disadvantages of Holding Company

Disadvantages of Holding Company

Disadvantages of Holding Company A holding company is a conglomerate corporation formed for the purpose of holding a controlling interest in several companies. Such a company does not usually carry any traditional business activities, such as manufacturing or offering services. Another name for a.....

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Discretionary Account

Discretionary Account

A discretionary account is an investment account that enables an approved broker to purchase and sell securities for each trade without the consent of the client. The client may sign a discretionary disclosure agreement with the appointed broker to record the client’s permission to allow th.....

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Managerial Accounting

Managerial Accounting

The practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers to achieve the goals of an organization is managerial accounting (also known as cost accounting or management accounting). Managerial accounting focuses on internal decision-making.....

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Percentage Of Completion Method

Percentage Of Completion Method

The Percentage of Completion (POC) is an accounting method which on the basis of the proportion of work done, measures the continuing identification of income and expenditures related to longer-term projects. This is in contrast to the completed contract process, which delays the revenue and cost.....

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Completed Contract Method (CCM)

Completed Contract Method (CCM)

The Completed-Contract Method (CCM) is an accounting method that allows taxpayers and companies, even though cash payments have been given or obtained during a contract period, to delay documentation of revenue and expenditures until after a contract is completed. This approach is used here under.....

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