Invoicing with Xero

The reason you are in business is to get paid, and hopefully get paid quickly.  Xero makes it very easy to invoice your clients and get paid. Invoices are very easy to create.  It is not necessary to create the client first, though it is helpful.  The invoice screen looks like this: You enter who

Return on Investment

The amount of profit earned by a business that could be paid to the owners/shareholders. This is calculated by profit divided by average investment during the fiscal period.

Return on Equity

Net income divided by stockholder’s equity. This evaluates the return earned based in comparison to investment. It is useful in evaluating the value of the investment to the stockholder.

Return on Assets

The ratio of net income (or operating income) to total assets; net income divided by total assets. This ratio is used to evaluate whether a reasonable return has been earned on the assets in business control. It is one way of evaluating the effectiveness of business practices.

Asset Turnover

The ratio of revenues to total assets. It is a measure of the ability of a company to use its assets to sell its products or services. A company with a high asset turnover is more effective in using its assets than one with a low asset turnover.

Accounts Receivable Turnover

The ratio of sales revenue (from the Income Statement or P&L) to accounts receivable (from the Balance Sheet). This ratio measures a company’s ability to convert revenue into cash.

Banking and Statement Reconciliation with Xero

Did you know that you don’t have to reconcile your bank account every month?  I don’t mean just leave it for six months and then do it all at once, I mean EVER.  Xero downloads and reconciles transactions for connected bank accounts every day.  Then once a day or every couple of days you (or

Statement of Stockholder’s Equity

A financial statement that reports changes in a corporation’s owners’ equity for a fiscal period. Increases come from income and retained earnings as well as additional investments. Decreases come from net losses and withdrawal of investment.

Statement of Cash Flows

A financial statement that reports events that affected a company’s cash account during a fiscal period.

Trial Balance

A Trial Balance provides proof that the ledger is in balance. It is mostly used by bookkeeper and accountants and provides a stepping stone for the preparation of other financial statements.