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A step-by-step guide to start a profitable accounting business

Accounting Tips for a Profitable Consulting Business

In our Clarity Coaching Program, one of the things we taught them was to build and track their client pipeline. With this system and metrics in place, they were able https://www.bookstime.com/ to turn prospective clients into paying clients within one day. By the end of the program, they had months that were as successful as their previous quarters.

Speak to an accounting expert

Consulting spans many industries — from IT and management, all the way to finance and HR. The fact they’re built around offering specialist insight others don’t have access to. This kind of business opportunity can be highly rewarding since businesses are always looking for ways to enhance productivity, generate more revenue, and find solutions to intricate issues.

Risk management consulting

Auto-posting any relevant story or information can help create a brand on social media – one where you’re seen as an authority on tax and accounting subjects. Posting constant content can help with visibility and, ultimately, increasing your customer base. However, while a strong work ethic, exceptional service, and competitive pricing will undoubtedly attract bookkeeping for consultants clients, a successful business always requires more than just good luck. Your location and your goals will determine cost in several ways, including whether you want to start a traditional brick and mortar firm or are looking to create a virtual office environment. Starting an accounting firm is no different from starting any other small business.

Accounting Tips for a Profitable Consulting Business

Entrepreneurs’ Guide to Identifying Logical Fallacies in Business

But it doesn’t mean having papers and sticky notes scattered all over your desk. What are the things that are most likely to influence a client’s perception of you in the little amount of information they’re able to get from a flyer, website, or social media? While the idea that “first impressions matter” may seem a little cliché, they still matter to your clients. As a result, making sure your communication is direct, pleasing, and engaging is critical to your success.

If you grow and cultivate a client list, you could enjoy getting out from under the thumb of your boss. Through interactive training programs for individuals and groups, PresentVoices helps transform miscommunication into engagement at work. With six years in business after being in the theater for many years, she believes that “warm intros” are the secret to getting clients, of whom she counts LinkedIn, Facebook, Google, among others. Having someone make a friendly and meaningful introduction on your behalf is the difference between someone ignoring your email or not.

Education consulting

Risk management & investigations

  • The terms ‘consultant,’ ‘contractor,’ and ‘freelancer’ are often used loosely and interchangeably, but critical differences exist.
  • Some popular options include QuickBooks, Xero, FreshBooks and Zoho Books, among others.
  • They help with business development, customer service strategies, facility management, and creating memorable guest experiences.
  • These four areas are the most common tasks requested from accounting services.

Accounting Tips for a Profitable Consulting Business

What Is the Difference Between Income Statement, Balance Sheet, and Cash Flow?

what accounts are found on an income statement

For example, a gain can be made by selling an old property such as a building, car, etc. Income statement revenue is the amount of money a company made from sales during the period of reporting; hence, it is also known as sales revenue. For example, the vertical analysis of reading a profit and loss statement would be more useful when you compare January items alone than when you compare January and February items.

Earnings before income tax

  • An income statement is one of the most common, and critical, of the financial statements you’re likely to encounter.
  • The price-earnings ratio (P/E) is a key financial metric that investors use to assess a company’s stock price.
  • This income statement shows that the company brought in a total of $4.358 billion through sales, and it cost approximately $2.738 billion to achieve those sales, for a gross profit of $1.619 billion.
  • This format is less useful of external users because they can’t calculate many efficiency and profitability ratios with this limited data.
  • Common size income statements make it easier to compare trends and changes in your business.

It is a statement prepared by companies that operate globally offering a wide range of products and services and consequently incurring an array of expenses. Given the nature of their operations, such entities have a complex list of activities and costs to account for. The “Income Statement” is a financial statement that summarizes a company’s revenues, expenses, and the resulting net income.

What is your current financial priority?

Think of the top line as a “rough draft” of the money you’ve made—your total revenue, before taking into account any expenses—and your bottom line as a “final draft”—the profit you earned after taking account of all expenses. By reading and analyzing all three financial statements, you’ll get a full picture of your company’s financial performance—so you can plan for growth, and avoid financial pitfalls. Revenue realized through primary activities is often referred to as operating revenue. Similarly, what accounts are found on an income statement for a company (or its franchisees) in the business of offering services, revenue from primary activities refers to the revenue or fees earned in exchange for offering those services. The balance sheet displays what a company owns (assets) and owes (liabilities), as well as long-term investments. Investors scrutinize the balance sheet for indications of the effectiveness of management in utilizing debt and assets to generate revenue that gets carried over to the income statement.

what accounts are found on an income statement

How to read a profit and loss statement

what accounts are found on an income statement

A business uses a classified income statement when it has a large number of revenue and expense accounts, and wants to consolidate this information to make it more easily readable. For a manufacturer these are expenses outside of the manufacturing function. Instead these expenses are reported on the income statement of the period in which they occur. The multi-step income statement provides an in-depth analysis of the financial performance of a business in a specific reporting period by using these profitability metrics. The financial statement that reports revenues and expenses is called the Profit and Loss statement (P&L) or the income statement. Whereas the retained earnings statements show how much of net income or profit is being reinvested back into a company.

A high gross profit margin indicates that a company is able to generate a lot of revenue with relatively little expenditure. The earnings per share (EPS) is a financial https://www.bookstime.com/ measure that calculates the profit for each share of a company’s stock. This metric is used to determine how much profit a company generates for each unit of its stock.

  • ROE is calculated by dividing a company’s net income by its shareholder equity.
  • There is no required template in the accounting standards for how the income statement is to be presented.
  • Investors and creditors analyze the balance sheet to determine how well management is putting a company’s resources to work.
  • The balance sheet can tell you where a company stands financially, and is separated into three main sections — assets, liabilities, and equity.
  • First, the operations section shows the cash flow from the company’s core business operations.
  • Income statements can also be used to make decisions about inorganic or organic growth, company strategies, and analyst consensus.

Step 2 of 3

Learn the fundamentals of small business accounting, and set your financials up for success. Amanda Bellucco-Chatham is an editor, writer, and fact-checker with years of experience researching personal finance topics. Specialties include general financial planning, career development, lending, retirement, tax preparation, and credit. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. A high interest coverage ratio indicates that a company can easily pay its interest expenses, while a low ratio suggests that a company may have difficulty meeting its obligations.

what accounts are found on an income statement

Related AccountingTools Courses

Revenue Accounts in the Income Statement

General expenses

Commuter survey opens May 20 > Hanscom Air Force Base > Article Display

A commuter highway vehicle is any vehicle with a seating capacity of at least six adults, not including the driver. Airfares aren’t typically recognized as eligible expenses under this job benefit. The shuttle service offers morning and afternoon runs, with the morning pick up located at the Massachusetts Bay Transportation Authority, or MBTA, Concord Commuter Rail Station located at 90 Thoreau St, Concord, Massachusetts. Log In to Your Account on the WMATA (Metro) website to register your new card and verify the name attached to the card matches your CAC name in your Participant Status. You can also add money to your personal “purse” after logging in.

Use your commuter plan to purchase qualified products or services

And, as we addressed in the last section, there is a gap between how employers and employees perceive the commute to work. Once HealthEquity is notified that you have left your employer, all future commuter elections not yet processed are canceled. Pay Me Back elections may be accessed after termination for 180 days after the end of the benefit month in which the expense was incurred. Commuter elections processed prior to your termination may still be fulfilled. Your financial obligation for the benefit is determined by your employer.

Why provide commuter benefits?

Commuter transit and parking accounts allow you to use pre-tax funds to pay for commuting costs. Even with the remote work revolution, plenty of people still travel daily to a job site or office. With transportation prices continuing to rise, commuter benefits are always welcomed.

Maintenance and repair expenses

Link the new card to your benefits in your Participant Status. Click “Link SmarTrip® Card.” You will receive an email confirmation from the MTBP office when your benefits have been reassigned to your new card. Please be advised that it can take 3-5 calendar days for transferred benefits to appear on the new card after the reassignment has been initiated. Employees who misuse the transportation benefit will be subject to criminal prosecution, and/or agency disciplinary action, up to and including dismissal. Substantiated violations of any of these certifications may impact an employee’s security clearance status. Multiple studies, including this one by Harvard Business Review, show that a healthy, well-aligned company culture improves business outcomes.

What is the advantage of being enrolled in the Commuter Benefits Program?

Commuter benefits are most often used only for travel between home and work—not for expenses related to traveling from an office to another business or client meeting. Fares and passes to ride mass transit vehicles to and from work could be covered. Public transit or mass transit vehicles may include buses, trains, ferries, trolleys, subways, streetcars, and water taxis. Both on-site and remote personnel will be invited to participate in the anonymous and voluntary survey to gain insights into the commuting patterns of Hanscom AFB employees.

Elect a commuter benefit to pay for qualified products and services. Commuters in the U.S. spend around $8,466 on their commute every year, which is about 19% of their annual income.1 That makes commuter benefits all the more essential. The 66th Logistics Readiness Squadron offers a commuter shuttle service for Hanscom AFB military, federal civilian employees, as well as contractor personnel.

Use your commuter benefits to purchase qualified products and services. If you’re doing it alone, think about whether you have time for setup and administration or if you’d rather use an outside service to manage it. This article explains commuter benefits and how employees can use them along with answers to common questions about this valuable job perk. Some companies offer them as part of their employee benefits package to help their employees save on their commutes. The unused benefits have become another headache for many commuters in New York, where more people use public transit than in any other American city and where the pandemic has emptied out subways, trains and buses. Many people working from home or out of a job can’t access the hundreds of dollars deducted from their paychecks for transit expenses.

Employees then submit receipts to get reimbursed for their commuting expenses. Full-time remote employees and government entities are exempt and employers are not required to provide a commuter benefit unless an employee requests one. Once requested, employers have 60 days to provide a commuter benefit. Employers can offer an employee-paid, pre-tax payroll deduction, or provide an employer-paid direct benefit such as a public transit key card or transportation shuttle. Commuter benefits are employer-sponsored plans that help employees save and pay for their commute to and from work.

HR teams must meet employees’ wants and needs while maintaining fidelity to the budget and meeting business goals. So it’s not a surprise that navigating the plethora of flexible benefits a company can offer can be difficult and some benefits, like https://turbo-tax.org/ commuter benefits, get lost in the shuffle. Employees usually can’t use commuter benefits funds to pay for fuel, mileage or other costs related to their vehicle. Generally, you can access the money in your commuter benefits account in a few ways.

  1. A commuter highway vehicle is any vehicle with a seating capacity of at least six adults, not including the driver.
  2. If you change employers, retire, or get terminated, you have a set amount of time after your last day of employment to use the funds before they’re forfeited.
  3. You have six months following the end of the benefit month to file claims to be reimbursed from your Pay Me Back account for expenses incurred prior to your termination.
  4. If you’re doing it alone, think about whether you have time for setup and administration or if you’d rather use an outside service to manage it.
  5. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties.
  6. Except you can’t contribute to an HSA and Healthcare FSA at the same time.

If an employee paid for an expense that’s covered by their commuter benefits, they can submit a claim to their commuter benefits administrator for cash reimbursement. A couple of examples of this would be if their card was declined at a parking meter or station, or if they accidentally left their card at home. Under this program, participating employees in the National Capital Region (NCR) receive “transit passes” in amounts equal to their personal commuting costs, commuter transit benefit not to exceed $315 per month (parking costs not included). To receive this benefit, employees must relinquish any federally subsidized parking permit, and may not be listed as part of a DoD carpool for purposes of qualifying for a parking pass. A Health Savings Account (HSA) and Healthcare Flexible Spending Account (FSA) provide up to 30% savings on out-of-pocket healthcare expenses. Except you can’t contribute to an HSA and Healthcare FSA at the same time.

These commuter benefits are exempt from federal income and payroll taxes. Commuter benefits are a simple way for both employers and employees to save money. Put in place to encourage the use of public transportation, these programs allow employers and employees to use pre-tax dollars to pay for a variety of commuting expenses. Contributions are transferred from your paycheck and credited to your commuter benefits account with pre-tax dollars. Because you’re not paying taxes on the money you contribute, you’re able to lower your taxable income and have more funds to use on eligible expenses.

According to CE officials, federal employees may be eligible for a $315 stipend to assist with public transportation or vanpooling expenses. Many transit authorities and/or providers offer reduced fare programs for senior citizens and persons with disabilities. As well, veterans with a disability rating of 60% or greater may qualify for some transit provider reduced fare programs.

Requires businesses with 20 or more employees located within the city to provide said employees with a commuter benefits plan. San Francisco requires employers with a San Francisco location and 20 or more nationwide employees to offer said employees a commuter benefits plan. Businesses with 50 or more employees across the Bay Area are required to register for the Bay Area Commuter Benefits Program. Seattle requires businesses with 20 or more employees to provide said employees with a pre-tax commuter benefits plan through which they can save and reimburse for qualified transit expenses.

Employees that are financially stressed are more likely to be less productive and less engaged at work than their counterparts. In fact, it’s estimated that employees’ financial stress cost companies $40 billion in lost productivity in 2022. Given that U.S. workers spend an average of 19% of their paychecks on their commute, offering them a way to save money on this expense could go a long way toward relieving this financial stress. Health savings accounts (HSAs) are individual accounts offered through Optum Bank®, Member FDIC, or ConnectYourCare, LLC, an IRS-Designated Non-Bank Custodian of HSAs, each a subsidiary of Optum Financial, Inc. Neither Optum Financial, Inc. nor ConnectYourCare, LLC is a bank or an FDIC insured institution. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties.

State you recognize and appreciate the impact commuting to the office has on their personal lives, and their financial, mental and physical health. In providing commuter benefits (perhaps in addition to others like Lifestyle Spending Accounts), your goal is to share in the commuting burden because it benefits everyone to be together in the office (at least part time). Crafting an impactful and economically efficient benefits package for a diverse workforce is a little science, a little art.

Commuter benefits — also known as transportation benefits — are perks or compensation offered to employees to help offset the cost of traveling to and from work. Lively offers a comprehensive suite of flexible benefit options to help you achieve your business and people goals while maintaining fidelity to your budget. We bring our extensive industry knowledge of what’s popular, what’s working (and what’s not) and which benefits pair well together, to our client partnerships so that you can craft the most impactful benefits package possible. Recent studies have shown that employee burnout is expected to reach critical levels in 2024 and one of the things that employees have stated they want most is a flexible work schedule. The more time the employees spend commuting, the less time they have to engage in activities outside of work.

A company with 50 employees can save almost $15,000 a year just by offering a pre-tax commuter benefit. Pre-tax commuter benefits allow employees to save up to 37% on their commuting expenses (depending on their tax bracket) while post tax commuter stipends and perks are a direct way to financially support employees’ commute. For employers and employees, benefits that qualify as transportation fringe benefits are not a part of an employee’s taxable wages.

Members who submit their Commuter Card or Parking pass orders before the order deadline (in many cases, the 10th of the month) will receive the order before the first day of the following benefit month. Please note that members will not receive an order immediately after placing one. Members can view their order deadline by logging into their Commuter account and selecting the Parking or Transit tab. To avoid having to manually place an order every month, members can set up recurring orders for the month(s) that they would like to submit an order for.

These financial institutions are FDIC or NCUA insured and your HSA account may be eligible for pass through insurance. If this is your first order for a HealthEquity Commuter Card, the new card will be mailed to you prior to the first day of your first benefit month. You can pause, change, or cancel contributions to your Commuter Transit or Parking account at any time, although there are deadlines for changes and cancellations for specific benefit months.

Amazon Reports $143 3 Billion in Revenue for First Quarter of 2024 The New York Times

cloud accounting

If you use online banking, then you’re already primed to use https://theseattledigest.com/navigating-financial-growth-leveraging-bookkeeping-and-accounting-services-for-startups/. Fortunately, many cloud accounting software platforms charge you month-to-month, so you’re not locked into an annual contract if you do change your mind and decide that you need to switch later on. Imagine that you’re waiting for a meeting with a potential client when you remember that you need to send an invoice to a different customer. If you’re worried that this compromises your personal business information, don’t be. Even better than a trusty computer behind a locked door, top-tier cloud accounting software uses safeguards to protect your information while it’s stored in secured systems. Cloud-based accounting software is just like traditional accounting software with the exception that all the data is hosted on remote servers instead of the user’s desktop computer.

Next Up In Business

  • We prioritized software that was either low-cost or had an affordable plan in a series of pricing plans.
  • The real game changer is the ability to merge data, manage currency conversions, and generate consolidated reports without waiting for month-end closings.
  • But, this is just one of many hypothetical anecdotes that illustrates the importance of moving to a cloud accounting software solution—sooner rather than later.
  • Cloud-based software companies ensure that the security and privacy of data about you and your organization is always airtight.
  • Some accounting software like Freshbooks will save you time on invoicing and accounts receivable tasks by equipping you with automatic recurring invoices and late payment reminders.

Xero provides multiple layers of protection for the personal and financial information you entrust to Xero accounting software. Security is a priority for Xero, as we know it is for you, so it’s also important you also take steps to safeguard your data. Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization.

cloud accounting

How We Evaluated Cloud Accounting Software

cloud accounting

More complex companies can add advanced tools that include projects and proposals, mileage and time tracking, and reports. Xero Accounting offers a user-friendly interface that is easy to learn, even if you’ve never used accounting software before. Its entry level plan is affordable, though it’s best suited to freelancers, solopreneurs and small businesses since it only allows 20 invoices and 5 bills per month.

  • Zoho Books offers a free plan for businesses with revenue of under 50K per annum.
  • Powered by AI, QuickBooks automatically uploads those receipts and scans them for key details like date, vendor, amount, and payment method so they’re matched with existing transactions from your bank feeds.
  • If you’re still getting your head around the jargon of cloud accounting, here’s our breakdown of some common terms.
  • When we created an invoice in Odoo, we found the form layout counterintuitive, especially on a mobile device.

How do I choose the best cloud accounting software for my business?

For instance, your accountant can create to-do lists and requests and, conversely, you can add documents, complete requests, and leave comments for your accountant to review. With QuickBooks Online Advanced, you can also restore a version of your company data based on a chosen date and time. Now you need to invest hours tracking down different spreadsheets and manual data entry to get a grasp on how your business is performing.

Cloud Accounting Software options

https://virginiadigest.com/navigating-financial-growth-leveraging-bookkeeping-and-accounting-services-for-startups/ gives you access to your key business numbers 24/7, from any location where you can access the internet, removing the need to work from one central office-based computer. Log in via a web browser from your laptop, or use your provider’s mobile app to access your accounts from your phone or tablet. Xero and FreshBooks are frequently highlighted for their user-centric design and intuitive functionalities. Xero has a fairly comprehensive feature set, which provides expense management, bank reconciliation, and multi-currency accounting.

cloud accounting

Safety and Security

Features include client management, multilingual and recurring invoicing, expense and mileage tracking, and reports. You can import bank and credit card statements but can’t set up direct connections to your financial institutions. Eight small business accounting applications scored high enough to be included in our list of the best small business accounting software. Two, Wave (free except for a $8 per month charge for scanning receipts) and TrulySmall Accounting ($20 per month), are best for microbusinesses, like independent contractors, freelancers, and sole proprietors. Each has multiple tiers of service to meet the needs of businesses that vary in size and functionality. Zoho Books is the small business accounting element of Zoho’s business software ecosystem.

Recording a bill in accounts payable

According to recent industry reports, the global AI market is projected to reach a staggering $190 billion by 2025, with a compound annual growth rate (CAGR) exceeding 36.8%. This surge is indicative of the widespread recognition of AI’s potential to drive innovation, enhance efficiency, and revolutionize business processes. Cloud platforms unlock endless opportunities, prioritize security, and embrace cutting-edge technologies.

What Is Online Accounting Software?

Accounting online with Xero will protect your data through multiple layers of security, such as encryption. Get to know your finances with accurate, daily figures when you’re accounting online with Xero. This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions. You want to be able to give your accountant access to relevant data within the system or easily email all necessary data and files to them.

You’re our first priority.Every time.

Accounting services pay special attention to your company’s expenses—not bills that you enter and pay (though some support this), but rather other purchases you make. This is an area of your finances that can accounting services for startups easily get out of control if you don’t monitor it. So, small business accounting software separates them into expense types. Next, the software compares them to your income using totals and colorful charts.

Debt-To-Equity Ratio: Explanation, Formula, Example Calculations

Like start-ups, companies in the growth stage rely on debt to fund their operations and leverage growth potential. Although their D/E ratios will be high, it doesn’t necessarily https://www.bookkeeping-reviews.com/ indicate that it is a risky business to invest in. Let’s look at a real-life example of one of the leading tech companies by market cap, Apple, to find out its D/E ratio.

D/E Ratio vs. Leverage Ratios

Looking at the balance sheet for the 2023 fiscal year, Apple had total liabilities of $290 billion and total shareholders’ equity of $62 billion. Results show the proportion of debt financing relative to equity financing. As we can see, NIKE, Inc.’s Debt-to-Equity ratio slightly decreased year-over-year, primarily attributable to increased shareholders’ equity balance. Bankers and other investors use the ratio with profitability and cash flow measures to make lending decisions. Similarly, economists and professionals utilize it to gauge a company’s financial health and lending risk.

Why are D/E ratios so high in the banking sector?

For example, a prospective mortgage borrower is more likely to be able to continue making payments during a period of extended unemployment if they have more assets than debt. This is also true for an individual applying for a small business loan or a line of credit. In the example below, we see how using more debt journal entry for discount allowed and received (increasing the debt-equity ratio) increases the company’s return on equity (ROE). By using debt instead of equity, the equity account is smaller and therefore, return on equity is higher. The nature of the baking business is to take customer deposits, which are liabilities, on the company’s balance sheet.

Debt to Equity Ratio Calculator

  1. Bankers and other investors use the ratio with profitability and cash flow measures to make lending decisions.
  2. D/E calculates the amount of leverage a company has, and the higher liabilities are relative to shareholders’ equity, the more leveraged the company is.
  3. The D/E ratio represents the proportion of financing that came from creditors (debt) versus shareholders (equity).
  4. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications.
  5. Shareholders do expect a return, however, and if the company fails to provide it, shareholders dump the stock and harm the company’s value.

Whereas, equity financing would entail the issuance of new shares to raise capital which dilutes the ownership stake of existing shareholders. It is the opposite of equity financing, which is another way to raise money and involves issuing stock in a public offering. Companies finance their operations and investments with a combination of debt and equity. Debt in itself isn’t bad, and companies who don’t make use of debt financing can potentially place their firm at a disadvantage. When looking at a company’s balance sheet, it is important to consider the average D/E ratios for the given industry, as well as those of the company’s closest competitors, and that of the broader market.

These assets include cash and cash equivalents, marketable securities, and net accounts receivable. Utilities and financial services typically have the highest D/E ratios, while service industries have the lowest. Investors, lenders, stakeholders, and creditors may check the D/E ratio to determine if a company is a high or low risk. Economic factors such as economic downturns and interest rates affect a company’s optimal debt-to-income ratio by industry.

For example, Company A has quick assets of $20,000 and current liabilities of $18,000. The quick ratio is also a more conservative estimate of how liquid a company is and is considered to be a true indicator of short-term cash capabilities. Different industries vary in D/E ratios because some industries may have intensive capital compared to others. Managers can use the D/E ratio to monitor a company’s capital structure and make sure it is in line with the optimal mix.

For someone comparing companies in these two industries, it would be impossible to tell which company makes better investment sense by simply looking at both of their debt to equity ratios. If you are considering investing in two companies from different industries, the debt to equity ratio does not provide an effective way to compare the two companies and determine which is the better investment. While this limits the amount of liability the company is exposed to, low debt to equity ratio can also limit the company’s growth and expansion, because the company is not leveraging its assets.

In contrast, a company’s ability to service long-term debt will depend on its long-term business prospects, which are less certain. If both companies have $1.5 million in shareholder equity, then they both have a D/E ratio of 1. On the surface, the risk from leverage is identical, but in reality, the second company is riskier.

Debt-financed growth may serve to increase earnings, and if the incremental profit increase exceeds the related rise in debt service costs, then shareholders should expect to benefit. However, if the additional cost of debt financing outweighs the additional income that it generates, then the share price may drop. The cost of debt and a company’s ability to service it can vary with market conditions. As a result, borrowing that seemed prudent at first can prove unprofitable later under different circumstances. These balance sheet categories may include items that would not normally be considered debt or equity in the traditional sense of a loan or an asset.

A low debt to equity ratio, on the other hand, means that the company is highly dependent on shareholder investment to finance its growth. A high debt to equity ratio means that a company is highly dependent on debt to finance its growth. Long term liabilities are financial obligations with a maturity of more than a year. They include long-term notes payable, lines of credit, bonds, deferred tax liabilities, loans, debentures, pension obligations, and so on.