Using Your Financial Statements to Evaluate Capital Budgeting Decisions

Strategic investments — such as expanding a plant, purchasing a major piece of equipment or introducing a new product line — can add long-term value. But management shouldn’t base these decisions on gut instinct. A comprehensive, formal analysis can help minimize the guesswork and maximize your return on investment. Forecasting Cash Flows Financial forecasts typically […]

What’s “Fair Value” in an Accounting Context?

In recent years, the accounting rules for certain balance sheet items have transitioned from historical cost to “fair value.” Examples of assets that may currently be reported at fair value are asset retirement obligations, derivatives and intangible assets acquired in a business combination. Though fair value may better align your company’s financial statements with today’s […]

Receivables May Be a Source of Cash in Tough Times

Many companies are continuing to struggle financially during the COVID-19 pandemic. If cash is tight, what can your business do to shorten its cash cycle? The answer could lie in your outstanding accounts receivable. Here are five strategies to help convert receivables into cash ASAP. 1. Apply for a line of credit. A line of […]

Liabilities for Unused Time Off Mount

During the pandemic, many employees have postponed using their allotted paid time off until COVID-related restrictions are lifted and safety concerns subside. This situation has caused an increase in accruals for certain employers. Here’s some guidance to help evaluate whether your company is required to report a liability for so-called “compensated absences” and, if so, […]

Reducing Liability Risk with D&O Insurance

Nonprofit organizations may operate under the assumption that their missions and their board members’ good intentions protect them from litigation. Sometimes, this assumption is proven wrong with a lawsuit. To protect your leaders from financial exposure, consider directors and officers (D&O) liability insurance. This coverage allows board members to make decisions without fear that they’ll […]

Reporting Profits Interest Awards

During the pandemic, cash has been tight for many small businesses, which may make it hard to attract and retain skilled workers. In lieu of providing cash bonuses or annual raises, some companies may decide to give valued employees a share of their future profits. While corporations generally issue stock options, limited liability companies (LLCs) […]

Updated Guidance for Impairment Testing

On March 30, the Financial Accounting Standards Board (FASB) published an updated accounting standard on events that trigger an impairment test under U.S. Generally Accepted Accounting Principles (GAAP). This simplified alternative may provide relief to private companies and nonprofit entities that have been adversely affected by the COVID-19 pandemic. Here’s what you should know. Simplified […]

Four Ways to Improve the Effectiveness of Your Audit Committee

Audit committees face many challenges in 2021. As the economy rebounds from the COVID-19 pandemic, there are new dimensions to the oversight roles and responsibilities of the audit committees. Consider taking these following four steps to fortify your committee’s effectiveness. 1. Focus on fundamentals Once you’ve wrapped up the financial reporting process for fiscal year […]