EBITDA and Other Scary Words

Accountants and other financial professionals – and the people they interact with – use, both comfortable and uncomfortably, a vocabulary that meets their needs and enables them to communicate concepts and issues that are critical to their profession. With an eye toward helping our colleagues, clients and friends better understand the things we talk about, we’ve put together a series of articles to help you embrace terminology like EBITDA, GAAP and PP&E, and to help you understand references like contingencies and commitments, along with a host of other terms. We hope this helps. As always, thanks for reading.

Articles January 21, 2020 EBITDA And Other Scary Words: Scary Word No.13: "Equity"

Equity equals assets and liabilities, and equity consists of stock, additional paid-in capital, retained earnings and some complex items (such as comprehensive income).

Articles January 16, 2020 EBITDA And Other Scary Words: Scary Words No.11 - Debt, Collateral, Covenants, Guarantees and More

When you are in need of bank financing, always check with your accountant before entering into such an agreement. They may offer advice to alleviate burdens that lending institutions may try to include in the agreement—saving you time and money.

Articles January 14, 2020 EBITDA and Other Scary Words: Scary Words No.10 - Commitments and Contingencies

Commitments and contingencies may only be a few words on the balance sheet, but they are still an important component of the financial statements and give a reader a more complete view of the company’s financial strength.

Articles January 13, 2020 EBITDA and Other Scary Words: Scary Words No.9 - Accrued Expenses

Accrued expenses commonly appear as a current liability on your balance sheet. The next time you talk commissions with your sales representatives or receive a product without an invoice, all of these transactions should record as accrued expenses!

Articles January 10, 2020 EBITDA and Other Scary Words: Scary Words No.8 - Accounts Payable

Nearly every expense your business incurs will flow through accounts payable. It is vital to the success of your business to closely monitor your payables and evaluate the best time to actually pay them.

Articles January 09, 2020 EBITDA and Other Scary Words: Scary Words No. 7 - 'Intangible' Assets

An intangible asset is an asset that is not physical in nature. Examples include non-compete agreements, customer lists, goodwill, and corporate intellectual property such as patents, trademarks, copyrights, trade secrets and domain names.

Articles January 08, 2020 EBITDA and Other Scary Words: Scary Word No. 6 – PP&E

When you are starting a business, PP&E is usually one of your biggest investments. Many business owners see this as an expense and feel it should be a reduction from the bottom line. But many may not see PP&E as what it is: a capital expenditure.

Articles January 07, 2020 EBITDA and Other Scary Words: Scary Word No. 5 – Inventory

The value of inventory depends on the order and timing of your transactions, market conditions, and the method you use to calculate inventory value. You can decrease the cash gap by understanding the days each product is in your warehouse.

Articles January 06, 2020 EBITDA and Other Scary Words: Scary Word No. 4 – Accounts Receivable

What can you do as a business owner to ensure you have healthy AR (Accounts Receivable)? The good news is you won’t need a degree in finance or mathematics to do it; there are several simple ways you can analyze your AR.