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Debt Ratio

Understand Debt ratio measures a company’s ability to pay off its total liabilities with its total assets. In other words, the ratio describes how much amount (in dollars) of assets is required to pay off its total liabilities. The formula to calculate the debt ratio is: = Total Debt / Total Assets How It Works […]

Revenue and Profit

What is Revenue? Revenue (also known as the sale) is the amount of money that a business generates from its operational activities. It is calculated by multiplying the price of a particular good sold with its quantity. For example, last year, XYZ Company manufactured 200 units of motorbikes and sold each at $700. The total […]

Modaraba: Definition, Types & Example

Understand In Islamic Mode of Financing, the Modaraba is a partnership in which one partner (usually an Islamic Bank) provides finance and another partner utilizes his/her skills to carry out any business.The profit earned from the business is distributed at predetermined rate and the party who provides finance is called “Rabb-ul-Mal” (the Investor) whereas the […]

Earn-out Structure in M&A: Definition, Advantages & Example

Understand In merger and acquisition, the Earn-out is a business pricing structure in which the seller of the business obtains additional compensation after the sale with subject to certain financial goals if achieved. In the Earn-out arrangements, the price is structured in such a way that an initial amount is paid at the time of […]

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