Difference between ROI and RI

Definitions and meanings: Return on investment: Return on investment (ROI) is a measure which calculates the efficiency of an investment by calculating percentage of return earned by that investment. Residual income: Residual income (RI) is the amount of income an investment opportunity generates above the minimum level of rate of return. Formulas and example: The … Read moreDifference between ROI and RI

Difference between NPV and IRR

A company that is going to invest money into a new project would certainly want to know the viability or profitability of that project. To appraise the potential performance of an investment project, companies mostly use four techniques – payback method, accounting rate of return method, net present value method and internal rate of return … Read moreDifference between NPV and IRR

Difference between overtrading and overcapitalization

Definitions and meanings Overtrading: Overtrading is an accounting term used to describe a situation where a business entity engages in business activities more than it can actively support from its available funds. This shortage of available funds occurs due to increased capital rationing which results in undercapitalization. Overcapitalization: When the net worth of share and … Read moreDifference between overtrading and overcapitalization

Difference between debt and equity

Selling equity and debt instruments are two popular methods that companies mostly adopt to raise funds for starting and/or continuing their business operations. The individuals and organizations to whom equity instruments are sold and funds are collected from them are known as stockholders or shareholders. The individuals and organizations to whom debt instruments are sold … Read moreDifference between debt and equity

Difference between itemized deduction and standard deduction

Definitions and meanings While computing the personal taxable income of an individual, tax law provides for certain deductions. These are deductions that can be reduced from the individual’s income to arrive at the income subject to tax i.e., taxable income. These deductions can take two forms- Itemized deduction or Standard deduction. Itemized deduction: Itemized deduction … Read moreDifference between itemized deduction and standard deduction