Accounting Firm in Texas

  What Is Paid-Up Capital? Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock. Paid-up capital is created when a company sells its shares on the primary market directly to investors, usually through an initial public offering (IPO). When shares are bought and sold among investors on the secondary market, no additional paid-up capital is created as proceeds in those transactions go to the selling shareholders, not the issuing company. KEY TAKEAWAYS Paid-up capital is money that a company receives from selling stock directly to investors. The primary market is the only place where paid-up capital is received, usually through an initial public offering. Funding for paid-up capital is arrived at from two sources: the par value of stock and excess capital. Paid-up capital is the amount paid by investors above the par value of a stock. Equity financing is represented by paid-up capital. Understanding Paid-Up Capi...

  What Is the Accounting Rate of Return (ARR)? The accounting rate of return (ARR) is a formula that reflects the percentage rate of return expected on an investment or asset, compared to the initial investment's cost. The ARR formula divides an asset's average revenue by the company's initial investment to derive the ratio or return that one may expect over the lifetime of an asset or project. ARR does not consider the time value of money or cash flows, which can be an integral part of maintaining a business. KEY TAKEAWAYS The accounting rate of return (ARR) formula is helpful in determining the annual percentage rate of return of a project. ARR is calculated as average annual profit / initial investment. ARR is commonly used when considering multiple projects, as it provides the expected rate of return from each project. One of the limitations of ARR is that it does not differentiate between investments that yield different cash flows over the lifetime of the project. A...

  What Is the Payback Period? The term payback period refers to the amount of time it takes to recover the cost of an investment. Simply put, the payback period is the length of time an investment reaches a breakeven point. People and corporations invest their money mainly to get paid back, which is why the payback period is so important. In essence, the shorter payback an investment has, the more attractive it becomes. Determining the payback period is useful for anyone (regardless of whether they're individual investors or corporations) and can be done by taking dividing the initial investment by the average net cash flows. KEY TAKEAWAYS The payback period is the length of time it takes to recover the cost of an investment or the length of time an investor needs to reach a breakeven point. Shorter paybacks mean more attractive investments, while longer payback periods are less desirable. The payback period is calculated by dividing the amount of the investment by t...

It's understandable that people often use the terms "bank" and "financial services" interchangeably. Though there is some legitimacy to this practice, there are some important distinctions that differentiate the two. Banking is a subset of the financial services sector, although not all bank services are strictly defined as financial services. To fully understand the difference between a financial services institution and a bank, or a financial service and a banking service, you may want to think of the distinction between the provision of a good and the intermediation of a service. Another way to look at it is that financial services are interested in managing a customer's money through investments, insurance, and other facilities, where banks take deposits and provide loans. Banks are also typically divided into retail banks, which provide the deposits and loans, and investment banks, which perform large scale activities, such as securities underwriting an...