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RATIO
Denotes relationships of items within and between financial statements, e.g., current ratio, quick ratio, inventory turnover ratio and debt/net worth ratios.
RECAST
Understandably, most closely held companies seek to suppress profits, thereby suppressing taxes. When this occurs, the financial statements of such companies do not reflect their true earning power. To provide an economic view of the company, as opposed to a pure accounting view, their financial statements should be recast. Recasting removes all direct and indirect owner-related benefits as well as capital and non-cash expenses such as interest and depreciation. The result of the recasting process is a value, which we refer to as Owner Benefit.
RETURN ON INVESTMENT
The amount of profit (return) based on the amount of resources (funds) used to produce it. Also, the ability of a given investment to earn a return for its use.
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