Author Archives: Dominick D'Andrea

Operating Ratios

Operating ratios are a class of ratios that are meant to analyze how well a company is using their assets. Specifically, these ratios show how well a company utilizes its assets to create revenue.

GAAP – Gains and Losses

“Gains and Losses” – this comes from investment revenue from a business, instead of regular operations. If they sell a piece of land at a profit, for example, that would be a “Gain”.

GAAP – Accounting for Equity

Equity (stockholders’ equity, owners’ equity, etc.) is the claim shareholders of a company have on assets once the liabilities have been satisfied. This is basically the “net worth” of the company – with each shareholder owning a fraction of the total.