October 1, 2021

How Businesses Can Help Employees Improve their Skills

Based upon a recent McKinsey Global Survey, nearly 9 in 10 (87 percent) of management and above level respondents affirmed they are currently, or within the upcoming five years, dealing with the skill gap among their employees. With the vast majority of businesses experiencing or forecasting a skills-gap, how can they close or reduce this challenge? Due to the so-called “Fourth Industrial Revolution,” as the World Economic Forum (WEF) explains, the best scenario it sees is 54 percent of workers requiring “reskilling and upskilling by 2022.” However, the WEF points out that 3 in 10 workers susceptible to occupation disruption due to advancements in applied science obtained additional training in 2018. It’s important to clarify the differences between re-skilling and […]
September 1, 2021

How and Why to Develop a Bring-Your-Own-Device Policy

With the internet available for essentially all employees and remote work becoming a part of more businesses’ operations, developing a bring-your-own-device (BYOD) policy is almost necessary to help employees be more productive and safe while working. Research shows there are many reasons why businesses should develop the right type of BYOD policy. According to Intel and Dell, 61 percent of Gen Y and 50 percent of workers 30 and older think the electronic devices they use at home are more capable in completing tasks in their everyday life compared to their work devices. Frost & Sullivan found that connected handheld technology helps employees, making them about one-third more productive and reducing their average workday by 58 minutes. A BYOD policy […]
August 1, 2021

How Businesses Can Harness Demand Forecasting

According to the Bureau of Economic Analysis, consumer spending has seen some interesting trends over the first half of 2021. May was flat, April was at 0.9 percent, March was 5.0 percent, and February was at 1.0 percent. With varied consumer spending statistics as the nation comes out of the pandemic, it’s important for businesses to get demand forecasting as accurate as possible. According to The University of Tennessee, Knoxville, demand forecasting is “a method for predicting future demand for a product.” It’s a calculated method to plan for inventory and helps prepare the supply chain for the future. Demand forecasting helps businesses forecast their future sales, which is based primarily on historical data. However, relying exclusively on historical data […]
July 1, 2021

How to Develop a Hybrid Work Policy Post-Pandemic

According to a Prudential survey, 87 percent of respondents said they would prefer to work remotely at least one day per week. This is compared to 13 percent of respondents preferring to work at the office all the time. The same survey found that one-third of respondents wouldn’t want to work for a business that had a 100 percent on-site work policy. According to a report from Microsoft titled, “The Next Great Disruption is Hybrid Work – Are We Ready?” 54 percent of employees report “feeling overworked” while 39 percent say they “feel exhausted.” The study attributes these employee feelings to an overload of “digital collaboration” through “remote meetings, emails, chats, and groups working on documents together.” With workers reporting […]
June 1, 2021

Vaccine Hesitancy: Why We Have It and How It Affects Employers and Employees

According to a Tufts University survey, six in ten of those surveyed are now vaccinated against COVID-19. However, almost 40 percent of the unvaccinated respondents said they won’t get the vaccine. Only 28.5 percent of the remaining unvaccinated respondents said they will get vaccinated against COVID-19 in the future, with the remaining unvaccinated respondents unable to decide whether they will take the vaccination. With vaccine hesitancy a concern, how can employers encourage more people to get the vaccine? It is important to understand why some view vaccines skeptically in order to overcome vaccine hesitancy among employees. The Johns Hopkins University Coronavirus Resource Center attributes vaccine hesitancy to these factors: The first factor is safety. Since the vaccine was developed faster […]
May 1, 2021

How Businesses Can Hedge Against Increasing Inflation

Inflation is on the rise. According to a recent Economic News Release from the U.S. Bureau of Labor Statistics (BLS), the Producer Price Index for final demand grew by 1 percent in March. February saw “final demand prices” grow by 0.5 percent; and January’s final demand prices increased by 1.3. According to BLS, the Producer Price Index (PPI) consists of many indicators and evaluates the mean difference over a period of time for the “selling prices received by domestic producers of goods and services.” In other words, PPI is a way to gauge how much manufacturers and similar businesses face in increased costs due to inflation. This inflation gauge takes a broad survey of approximately 10,000 unique manufactured items and […]
April 1, 2021

How Companies Can Become More Nimble During the Product Lifecycle

The majority of U.S. industrial product company CFOs have shared concerns that COVID-19 would impact their businesses negatively. For companies that develop and manufacture products, understanding the product lifecycle and how to work around crises like the COVID-19 pandemic can be effective to help improve the longevity and success of companies. Market Development Stage According to the Harvard Business Review (HBR), the first stage of the product lifecycle is market development. This normally happens when a company introduces a new product for sale. There is usually little demand at this point; instead, demand has to be cultivated among consumers. Factors that impact the rate of introduction include the product’s novelty; how practical it is for consumers’ existing problems; and how […]
March 1, 2021

Some Businesses Rely on Line of Credit to Escape Damages Caused by Pandemic

As businesses attempt to work their way through to a post-pandemic world, there are various means to bridge the financial gap. As recommended by the U.S. Small Business Administration (SBA), some companies can use a line of credit to reach international customers or opportunities outside the United States to make up for the damage COVID-19 caused with fewer domestic sales. How can businesses use a line of credit to increase their chance of survival and pivot to profitability as we move through 2021? According to Debt.org, a business line of credit functions like any other line of credit that uses revolving debt. Businesses use a portion of their line of credit to meet financial obligations and repay based on the […]
February 1, 2021

How Firms Can Restore Balance Sheets to Better Health

According to the World Bank Group, for businesses in emerging markets and developing economies, the bottom fourth percentile of the non-financial corporate (NFC) sector saw their balance sheets deteriorate. Looking at these businesses’ Interest Coverage Ratio, the average figure dropped to 0.06 from 0.35 between the fourth quarter of 2019 and in the midst of the coronavirus pandemic’s ongoing effects. The ICR is a measure of a firm’s ability to repay their debt in accordance to existing obligations, whereby a higher ratio indicates a better ability to do so. This is calculated by dividing earnings before interest and taxes by Interest expense. With businesses seeing losses of as much as three-quarters of revenue in a three-month timeframe, as McKinsey & […]
January 1, 2021

COVID-19 Vaccination Considerations for Employers

Looking at a 2009 letter from the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA), employers may be able to require their employees to take the COVID-19 vaccine, with a few exceptions (such as the likelihood of a life-threatening reaction to it). With the COVID-19 vaccine being rolled out, how can employers balance workplace safety, maintain productivity and stay within the law? According to the Centers for Disease Control & Prevention (CDC), the early vaccination stages will likely focus on those who are at particular risk of severe and life-threatening complications from COVID-19. This is expected to include elderly individuals, especially those who live in nursing homes. It’s also expected to include frontline healthcare workers who may be […]
January 1, 2020

How to Calculate and Analyze Return on Equity

When it comes to evaluating a business, especially one that is publicly traded, determining its return on equity (ROE) is one way to see how it’s performing. What is Return on Equity? Return on equity is a ratio that gives investors insight into how effectively the company’s management team is taking care of the shareholders’ financial investments in the company. The greater the ROE percentage, the better the business’ management staff is at making income and creating growth from shareholders’ investments.   How ROE is Determined In order to calculate ROE, a company’s net income is divided by shareholder equity. To arrive at net income, businesses account for the cost of doing business, which includes the cost of goods sold, sales, […]
December 1, 2019

Furniture, Fixtures and Equipment – and Depreciation

When it comes to determining depreciation for Furniture, Fixtures and Equipment (FF&E), there are many considerations that exist for accountants and business owners. Defining Furniture, Fixtures and Equipment FF&E refers to expenses for business items that are not affixed to the building where that business operates. Real world examples of depreciable assets includes chairs, desks, phones, tables, cabinets, etc., which are used to perform business-related tasks, directly or indirectly. These types of items are associated with long-term use generally more than 12 months, according to the Internal Revenue Service. Understanding How It Works When it comes to accounting for the expense of the item, it can be depreciated equally and discreetly over its useful life. According to the IRS’ General […]
November 1, 2019

LIFO Versus FIFO and How Each Method Values Inventory

As the name implies, First-In, First-Out (FIFO) is a way for companies to value their inventory. The first items put into inventory or produced by the company are accordingly the first taken out of inventory or transferred to customers and therefore expensed. When it comes to accounting for acquisition and/or production costs, initial and earlier costs are the first to be expensed, with more recent costs staying on the balance sheet to be expensed later. Assume a company already has 200 widgets costing $4/widget. From there, the company increased its inventory at three more times during a selected accounting period. Three hypothetical, additional purchases include: 200 widgets @ $6/widget 200 widgets @ $7/widget 200 widgets @ $8/widget If the company […]
October 1, 2019

When Full Costing Accounting Makes Sense

With more than 1.4 million accounting jobs in 2018, according to the Bureau of Labor Statistics, there are many different uses for accountants and their skills. With the need for accuracy and transparency in private and public accounting, one important concept to explore is absorption, or full costing. Absorption or full costing is an accounting method that is used by businesses to determine the complete cost of producing products or services. When it comes to calculating the full cost, there are three main categories taken in account: Direct Costs – How much material, labor, machinery, etc. it costs to produce each product. Total Amount of Fixed Costs – Examples include monthly rent payments, tax payments, base salaries, etc. These are […]
September 1, 2019

Payroll Management Tips

When it comes to an employer’s responsibility for non-exempt workers, according to the U.S. Department of Labor, there are many requirements businesses must follow related to payroll. In one example, there are strict regulations on what information employers must document for each non-exempt worker. While there’s no requirement on how the information is recorded, there are three main categories. Personal details: This should include the employee’s name, complete address, Social Security number, date of birth and gender. Job details: This must include the worker’s job description and hours clocked in each day and week. Pay details: The employee’s hourly wage based on straight time, and how employees are compensated – be it hourly, weekly, project or item-based. It should include […]
August 1, 2019

Understanding and Applying Accounting Reports and Ratios

When it comes to tracking incoming sales and outgoing expenses, there are many ways businesses can keep up with their invoices and implement strategies to reduce the time they spend on unpaid sales. Accounts Receivable Turnover Ratio Simply defined, the accounts receivable turnover ratio is a way of showing what percent of a company’s receivables or invoices are paid by clients.  The U.S. Small Business Administration explains this ratio is determined by “dividing average accounts receivable by sales.” Determining average accounts receivable is done by adding the beginning and ending figures — be it a month, quarter or year, then dividing by 2. Determining the sales figure is calculated by taking the total sales still on credit and deducting any […]
July 1, 2019

How to Define and Calculate a Break-Even Analysis

According to data from a U.S. Small Business Administration Office of Advocacy report from August 2018, businesses have varied longevity. Nearly 80 percent (79.8 percent) of business startups in 2016 lasted until 2017. Between 2005 and 2017, the SBA mentions that 78.6 of new businesses lasted 12 months. Similarly, nearly 50 percent lasted at least five years.   While there are many reasons why a company goes out of business – one is profitability. Knowing when the business is breaking even and will start making a profit can be accomplished with a break-even analysis. Defining a Break-Even Analysis As the SBA explains, a Break-Even Analysis is a useful way to measure the level of sales necessary to determine how many […]
June 1, 2019

How to Make the Most of Margins and Markups

When it comes to gross margins and the American economy, they vary widely throughout the country’s industries. When New York University’s Leonard N. Stern School of Business recently compiled gross margin statistics for January 2019, they found the low end includes the Auto and Truck industry with a gross margin of 11.45 percent and the Oilfield Services/Equipment industry with a gross margin of 10.70 percent. On the top end, the General and Diversified Real Estate industry saw a gross margin of 73.08 percent and the Investments and Asset Management industry saw a 70.67 percent gross margin. While these gross margins are divergent, understanding more about gross margins gives better context for understanding this measure. Why Gross Margins Matter One way […]
May 1, 2019

How to Budget for Estimated Tax Payments

According to a March 22 Internal Revenue Service News Release, 2018 federal tax filers might be able to have any penalties for an underpayment of estimated tax removed. This could be possible if they’ve paid at least 80 percent of their 2018 tax obligations through either quarterly estimated payments, income tax withholdings or a combination of both during the 2018 calendar year. This new level was established after the 90 percent payment requirement was reduced to 85 percent of estimated tax obligations on Jan. 16. With paying estimated taxes a legal requirement for many taxpayers, let’s examine how this works for individuals and business entities. Individuals and Organizations Responsible to Pay Estimated Taxes For the most part, corporations are required […]
April 1, 2019

How to Determine a Business’ Health by its Net Profit Margin

When it comes to figuring out a company’s net profit margin, this calculation gives a business and its financial officers a much better picture of the company’s profitability. Defining Net Profit Margin Net profit margin determines the percentage of revenue that ends up as profit after expenses are accounted for. Represented as a percentage, it’s calculated by taking the company’s net profit and dividing it by the entire revenue. Looking at the Formula Itself When it comes to calculating the net profit, it goes beyond the gross margin calculation, which only factors in the “cost of goods sold” – or how much the input materials and direct labor cost the company to produce saleable goods. Determining net profit includes factoring […]
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