Definition: Profitability ratios are the financial measures to analyze the earning capacity and determine the financial soundness of the organization by comparing the earnings with different expenditures, and ensure the optimum utilization of the various resources. Analyzing the financial position of an organization using the profitability ratios, are essential for all the … [Read more...] about Profitability Ratios
Accounting
Cost Classification
Definition: Cost classification is the logical process of categorising the different costs involved in a business process according to their type, nature, frequency and other features to fulfil accounting objectives and facilitate economic analysis. Cost refers to the value sacrificed with the aim of gaining something in return. Every business process involves some cost. It is … [Read more...] about Cost Classification
Cost Accounting
Definition: Cost accounting is the accounting method for ensuring cost-effectiveness by accumulating, organising, recording, calculating, analysing and assessing the overall expenses incurred on a product, process or project, etc. It is mostly used in industrial units or factories where the goods are manufactured. Unlike financial accounting, cost accounting is a broader … [Read more...] about Cost Accounting