How the Dividend Yield and Dividend Payout Ratio Differ

When comparing the two measures of dividends, it’s important to know that the dividend yield tells you what the simple rate of return is in the form of cash dividends to shareholders, but the dividend payout ratio represents how much of a company’s net earnings are paid out as dividends. While dividend yield is the more commonly known and … Read more

Rating Credit: Individuals, Companies, and Governments

The letters or numbers used to express a credit rating or credit score express the creditworthiness of the individual, business, or government being assessed. Credit ratings are usually expressed in letters such as “AAA” or “BB.” Credit scores, which are normally assigned to individuals, are expressed as numbers ranging from 850 to 300. Credit rating … Read more

How to Make Entries for Accrued Interest in Accounting

Adjusting Entries Suppose a firm receives a bank loan to expand its business operations. Interest payments are due monthly, starting on Jan. 1. Even though no interest payments are made between mid-December and Dec. 31, the company’s December income statement needs to accurately reflect profitability by showing accrued interest as an expense; after all, those … Read more

Money Market Regulation Changes: What You Need to Know

Money market regulations that went into effect in October 2016 actually began as rules adopted by the Securities and Exchange Commission (SEC) in 2014. When those rules kicked in, one longstanding “safe” retirement plan investment option changed forever. The effect of these rules depends on the type of money market fund you have. (For more, see The … Read more

How Return on Equity Can Help Uncover Profitable Stocks

Investing in companies that generate profits more efficiently than rivals can be very profitable for portfolios. Return on equity (ROE) can help investors distinguish between companies that are profit creators and those that are profit burners. On the other hand, ROE might not necessarily tell the whole story about a company, and therefore must be … Read more