The term « Tax Shield » refers to the deduction allowed on the taxable income that eventually results in the reduction of taxes owed to the government. The formula for tax shields is very simple, and it is calculated by first adding the different tax-deductible expenses and then multiplying the result by the tax rate. To get […]
For example, cable television is intended to have high excludability, but the ability of individuals to get illegal cable hookups puts cable television into somewhat of a grey area of excludability. Similarly, some goods act like public goods when empty and like common resources when crowded, and these types of goods are known as congestible […]
It’s worth noting that, in some cases, goods are non-excludable by their very nature. For instance, how would one make the services of a lighthouse excludable? But in other cases goods are non-excludable by choice or design. A producer can choose to make a good non-excludable by setting a price of zero. It’s not commonly […]
But if the company sells a valuable piece of machinery, the gain from that sale will be included in the company’s net income. That gain might make it appear that the company is doing well, when in fact, they’re struggling to stay afloat. Operating net income takes the gain out of consideration, so users of […]
By inputting your gross salary and selecting the applicable deductions, you can quickly estimate your net salary and plan your finances accordingly. These income ranges vary with the cost of living in metropolitan areas and with household size. A household in a metropolitan area with a higher-than-average cost of living, or one with more than […]
It’s a snapshot of a company’s financial position, as broken down into assets, liabilities, and equity. Balance sheets serve two very different purposes depending on the audience reviewing them. The left side of the balance sheet outlines all of a company’s assets. On the right side, the balance sheet outlines the company’s liabilities and shareholders’ […]
A lender will usually require a balance sheet of the company in order to secure a business plan. Again, these should be organized into both line items and total liabilities. This stock is a previously outstanding stock that is purchased from stockholders by the issuing company. If the company wanted to, it could pay out […]