What-If Calculation – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a What-If Calculation?A what-if calculation refers to an output that a financial model offers by using several assumptions or cases. What if a variable x is inserted into the model, what will be the final output? What-if calculations help an economist in...

Trend Analysis – Explained

by TheBusinessProfessor | Feb 23, 2025 | Research, Quantitative Analysis, & Decision Science

What is a Trend Analysis?Trend analysis provides a means to analyze company data over a period of time by focusing on the change in specific line items within the income statement and balance sheet.This tool is used with the assumption that history always repeats...

Accounting Principles Board – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is the Accounting Principles Board?The Accounting Principle Board was created by the American Institute of Certified Public Accountants (AICPA) in 1959 as an authoritative body for the purpose of issuing guidelines and rules on accounting principles. The...

Entropy – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is Entropy? Entropy is something that measures randomness. The term is similar to infinity and analyzes how unpredictable a random variable can be. Financial experts use this term for knowing the probability of a particular type of behavior that a specific stock,...

Equilibrium (Economics) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Economic Equilibrium?Equilibrium is the economic condition where market demand and market supply are equal to each other, which ultimately brings stability in the price levels. Normally, when the supply of goods and services exceeds over time, it causes a...

Equity Method vs Consolidation Method (Accounting) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is the Equity Method?The equity method is the accounting method used by Company A to report on its financial statements the earnings of Company B in which the reporting company holds an ownership interest. The amount included is calculated as:Amount Reported =...

Check 21 Act – Explained

by TheBusinessProfessor | Feb 23, 2025 | Banking, Lending, and Credit Industry

Update Table of Contents What is the Check Clearing For The 21st Century Act (Check 21)?How Does the Check 21 Act Work?Check Truncation Substitute Checks Benefits of Check 21 to the Check Depositors and Writers What is the Check Clearing For The 21st Century Act...

Accounting Equation – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is the Accounting Equation?Assets = Liabilities + EquityThe accounting equation, also known as the fundamental accounting equation or a balance sheet equation, is a principle of accounting that establishes a correlation between assets, liabilities and equity of...

Accounting Profit – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is an Accounting Profit?Accounting Profit is a company’s gross revenue minus its explicit costs. It is the net earnings on its income statement calculated according to generally accepted accounting principles (GAAP). The explicit costs of a company include...

Accounting Cycle – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is the Accounting Cycle?An accounting cycle is the comprehensive process of identifying, analyzing, sorting, recording and crediting the payments made and received by a company or any other business entity during a specified period of time, referred to as the...