Financial Reporting

Have you ever wondered how companies grow and expand without constantly relying on external financing? In the realm of business, the concept of retained earnings plays a pivotal role. Retained earnings are the profits that a company keeps after paying out dividends to its shareholders. By calculating the cost of retained earnings, businesses can determine the opportunity cost associated with using this internal source of funding. In this article, we’ll delve into the key steps involved in calculating the cost of retained earnings, exploring its significance and implications for financial planning and decision-making....

Have you ever wondered what happens to the excess value when a company acquires another for more than the latter’s net assets? That’s where goodwill comes into play. In the world of accounting, goodwill is an intriguing asset that captures the intangible value of a business beyond its identifiable assets. In this article, we’ll dive into the meaning of goodwill in accounting, exploring its significance, how it’s calculated, and the potential implications it can have on financial statements....