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Articles on Trending Technologies
Technical articles with clear explanations and examples
What is meant by Fixed Investment Ratio Method?
Fixed Investment Ratio MethodEvery business needs to maintain an optimum level of working capital to run the business smoothly. While excessive working capital harms the business inadequate amount of working capital is also a matter of concern. Therefore, businesses must estimate the working capital needs for the shorter and longer-term efficiently.The fixed investment ratio method for the calculation of working capital is a popular method. The fixed investment ratio method is one such method that can be adopted to determine the working capital needs of a company.Working Capital Calculation as A Percentage of Fixed AssetsThe calculation of working capital a ...
Read MoreHow to Calculate Working Capital using Sales Ratio Method?
What is Sales Ratio Method?The sales ratio method is one of the easiest methods of calculating working capital. This method is based on the assumption that “history repeats itself.”Therefore, to determine the working capital in this method, one has to have the past figures of sales in hand.In the sales ratio method, the figure of working capital is determined as a percentage of sales, and the figure is obtained from the past performances of the company. This method is similar to technical analysis of the stock market where past performances of the stock are used to determine the future price ...
Read MoreWhat is Current Assets Holding Period Method?
Current Assets Holding Period MethodThe current assets holding period method is used to estimate the working capital needs of an organization based on the current assets the company holds. To estimate the working capital needs, the average holding period of the current assets is related to costs based on the firm’s experience in the last year. This method is essentially an operating cycle method.There are a host of factors that affect the working capital calculations. Factors that are most influential includeSeasonal fluctuationsInvestment costsAccurate sales forecastsVariability in sales priceCredit policiesProduction cycleCollection policies.Operating or Working Capital CycleThe operating cycle of a product ...
Read MoreWhat is Trade-off Theory of Capital Structure?
Trade-off Theory of Capital StructureIn the risk-return trade-off theory of capital structure, there is an optimum level of current assets and/or working capital that a company must maintain to gain the optimum level of profitability. There is another way to look into the risk-return trade-off theory of business companies. It is related to the liquidity of the company.In fact, there are costs of maintaining current assets at a certain level. One of these costs is the cost of liquidity while the other is the cost of illiquidity.Excessive Amount of Current AssetsA company’s level of liquidity will be very high if ...
Read MoreWhat is the Significance of Current Assets over Fixed Assets Ratio?
Significance of Current Assets over Fixed Assets RatioCompanies need certain levels of current and fixed assets to support a certain level of output. However, in order to support the same level of output, the organization needs to maintain a given level of current assets. The current assets of an organization generally increase with the increase in sales and revenues.In contrast to popular belief, the amount of current assets does not increase proportionally with the output of the companies. The current asset may generally increase with the decrease in output of a company. This theory is based on the assumption that ...
Read MoreHow does real-time response mitigate the risks of cyber threats?
The Importance of Real-Time Threat InformationWhen it comes to cybersecurity, timing is everything, which is why combating cybercrime proactively rather than reactively is crucial.Fresh, focused, and actionable information is gathered from internal and external sources, as well as automated and human-generated sources, including real-time threat intelligence. Consider forums on the dark web, social media, analyst reports, and hacktivism sites.This real-time threat information gathered from different sources may be used to assist IT professionals such as CISOs, fraud managers, and SOC managers, among others, in responding to attacks faster, repelling them more effectively and strengthening their systems against future threats. In ...
Read MoreDifference between Electromotive Force (EMF) and Magnetomotive Force (MMF)
The Magnetomotive force (MMF) in a magnetic circuit is analogous to the electromotive force (EMF) in an electric circuit. MMF is the factor responsible for driving the magnetic flux in a magnetic core, while the electromotive force EMF is the factor responsible for the flow of electric charge (or electrons) in an electric circuit.What is Electromotive Force (EMF)?The total amount of energy given to a unit charge by a source of energy such as generator, battery, etc. is known as electromotive force (or EMF) of the energy source. As the electromotive force has “force” in its name but technically, the ...
Read MoreDifference between Inverter and UPS
There are two important devices viz. UPS and inverter that are used extensively to provide backup supply to the electrical systems. As we know, today electricity has become a necessity because almost all of our day-to-day activities require electricity. Since, all the device such as mobiles, laptops, PCs, washing machines, coolers, ACs, etc. use electricity to work. If the electric supply gets down, it will greatly affect the operation of these devices. Therefore, to smoothly run these devices even after the cut out of electric supply, two electric power systems are designed named Inverter and UPS.Basically, both UPS and inverter ...
Read MoreDifference between P-N Junction Diode and Zener Diode
Both the PN junction diode and the Zener diode are semiconductor devices that are extensively used in various electronic circuits. A PN junction diode is mainly used for rectification (transforming AC into DC), while a Zener diode is used for voltage regulation in the electronic circuits.There are a number of differences in both PN junction diode and Zener diode which are explained in detail in the below table. Before going into the discussion about the differences between PN junction diode and Zener diode, it is fruitful to get the basic details about the PN junction diode and Zener diode.What is ...
Read MoreDifference between Permanent Magnet and Electromagnet
A magnet is a material or object which has ability to produce a magnetic field and can attract or repel other ferromagnetic materials. Based on the method of production of magnetic field, the magnets are classified into two types viz. −Permanent magnetElectromagnetThe main difference between an electromagnet and a permanent magnet is that an electromagnet produces the magnetic field by the effect of electric current flowing through a coil insulated wire wound around a piece of soft magnetic material. Whereas, a permanent magnet is made up of hard magnetic material and once it is magnetized, it can produce the magnetic ...
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