|Capital expenditure/capital investment. The payment required to acquire or improve a capital asset. |
Cash-basis accounting. An accounting process that records transactions when cash actually exchanges hands. This practice is less conservative than accrual accounting when it comes to expense recognition, but sometimes more conservative when it comes to revenue recognition.
Cash flow statement. A review of a company's use of cash, this statement tells where the company's money comes from, and where it goes—in other words, the flow of cash in, through, and out of the company.
Cash utilization/cash flow measure. The changes that affect a cash account during an accounting period.
Chart of accounts. A way to outline the accounting system of a business, the chart of accounts establishes how the business will operate, what information will be captured, and what information will subsequently be readily retrievable by the system. It includes such items as inventory, fixed assets, accounts receivable, and costs.
Cost of capital. The costs of different types of capital, including short-term debt, long-term debt, and equity. This cost is typically expressed as a percentage of the underlying capital.
Cost of goods sold (COGS). The total cost paid for the products sold during the accounting period, plus freight-in costs. Most small retail and wholesale businesses compute cost of goods sold by adding the value of the goods purchased during the accounting period to the value of the beginning inventory, and then subtracting from that figure the value of the inventory on hand at the end of the accounting period. For manufacturers, cost of goods sold includes, in addition to raw materials, the direct cost of manufacturing labor (including Social Security and unemployment taxes on factory employees), and overhead charges such as supervision, power, and supplies.
Cost of services (COS). Charges billed to a customer for a service. Overhead is often included in the calculation of the cost of services.
Costs and expenses. The costs related to running the business—for example, salaries, office overhead, light, heat, legal and accounting services.
Current assets. Those assets that are most easily converted into cash: cash on hand, accounts receivable, and inventory.
Current ratio. This is a prime measure of how solvent a company is. It's so popular with lenders that it's sometimes called the banker's ratio. Generally speaking, the higher the ratio, the better financial condition a company is in. A company that has $3.2 million in current assets and $1.2 million in current liabilities would have a current ratio of 2.7 to 1. That company would be generally healthier than one with a current ratio of 2.2 to 1. To calculate the current ratio, divide total current assets by total current liabilities.
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