# Guides

Free guides to ecommerce and finance concepts. Learn how to calculate cost of goods sold, operating profit, current ratio, inventory turnover, and much more.

#### Income Statement

Income Statement, one of three main financial statements, shows a company's revenue, expenses, and profits. Learn the definition, components, and see examples.

#### Balance Sheet

Balance sheet is one of three main financial statements and reports a company's assets, liabilities, and owner's equity. Learn more about this statement, review examples, and learn common balance sheet ratios.

#### Cash Flow Statement

The cash flow statement is a financial statement that shows how cash inflows and cash outflows affect a company's cash position in an accounting period. Learn the definitions, key concepts, how to prepare the statement, and the right way to analyze the numbers.

#### Cost of Goods Sold

Cost of Goods Sold (COGS) is the direct cost paid by a company for what they sell. Learn the definition, formula, how to calculate COGS, and why it matters.

#### Gross Profit

Gross profit is an essential profitability metric for business owners. Learn how to calculate gross profit, use the gross profit formula, and see examples.

#### Operating Expenses

Operating expenses (abbreviated as OPEX) are costs incurred during normal business operations. It's an income statement item and includes rent, utilities, salaries, advertising, insurance costs, legal fees, and insurance costs.

#### Operating Profit

Use this free guide to understand operating profit, how it differs from gross profit, and why it's also called earnings before interest and tax (EBIT).

#### Earnings Before Interest and Tax (EBIT)

Earnings before interest and taxes measures a company's profitability. The formula is revenue minus expenses excluding interest and taxes. In this post, we go through the definition, formula, examples, and compare EBIT to EBITDA.

#### Net Profit

Net profit is an essential profitability metric for business owners. Calculate net profit, use the net profit formula, compare to gross profit, explore net margin, and more with this free guide.

#### Profit Margin

Profit margin is an accounting ratio that shows a company's profit as a percent of revenue. Learn to calculate and review gross, operating, and net profit margin.

#### Gross Margin

Gross margin is a profitability ratio that compares a company's gross profit to its revenue. Learn the formula and how to calculate gross profit margin.

#### Depreciation

Depreciation is an accounting method to decline an asset’s value over its useful life. Learn when to use straight line, double declining, units of production, and sum of years. Understand the formulas and how to find your accumulated depreciation balance.

#### Amortization

Amortization is an accounting method to lower the book value of a loan or intangible asset. Learn about the amortization definition, what an amortization schedule is, and how a business should correctly amortize debt or intangibles.

#### Current Assets

Current assets are a balance sheet item that include cash, cash equivalents, short-term investments, and other assets that will quickly convert to cash.

#### Current Liabilities

Current liabilities are a balance sheet item that include accounts payable, taxes payable, dividends payable, accrued expenses, unearned revenue, and other obligations that must be paid within a year.

#### Accounts Receivable

Accounts Receivable (AR) is a current asset on a company's balance sheet that measures how much money is owed to the company by customers and other debtors. Learn about the accounts receivable definition, see AR examples, review AR ratios, and understand how to analyze this line item.

#### Accounts Receivable Turnover

The accounts receivable turnover ratio formula is net credit sales divided by average accounts receivables. A higher AR turnover ratio means a company is efficiently collecting its accounts receivable, leading to more cash on hand.

#### Accounts Payable

Accounts payable (AP), also known as trade payables, is a current liability on a company's balance sheet. It's a measure of how much money the company owes to vendors. Learn about the accounts payable definition, review examples, and see how to analyze AP.

#### Accounts Payable Turnover

Accounts payable turnover ratio formula is net credit purchases divided by average accounts payable. A higher AP turnover ratio is better and means a company is paying creditors on time, making them more trustworthy.

#### Liquidity Ratio

Liquidity ratios measure a company's ability to meet its short-term obligations. Understand the definitions, formulas, examples, and compare them to solvency ratios.

#### Solvency Ratio

Review solvency ratios, liquidity ratios, the differences, formulas, and examples. Measure your company's ability to meet its long-term debt obligations.

#### Interest Coverage Ratio

Interest Coverage Ratio (ICR) measures a company's ability to make its interest payments. The ICR formula is operating profit (EBIT) divided by interest expense. In this free guide, we walk through the formula, the definition, review examples, and share other solvency ratios.

#### Contribution Margin

Contribution Margin (CM) is an accounting calculation that shows the profitability of a single sale. The formula is selling price per unit minus variable costs per unit.

#### Cash Ratio

Cash ratio is a liquidity metric that shows a company's ability to pay short-term obligations with cash. The formula is cash and cash equivalents divided by current liabilities.

#### Current Ratio

Current ratio is a liquidity ratio that shows a company’s ability to pay short-term obligations. The formula is current assets divided by current liabilities.

#### Return on Assets

Return on Assets (ROA) is a profitability measure that is calculated by dividing net income by average total assets. This metric is important for both operators and investors. Learn the ROA definition, formula, and limitations through our examples.

#### Return on Equity

Return on Equity (ROE) is a profitability measure calculated by dividing net income by shareholders’ equity. Both investors and operations want a higher ROE. We will walk through the return on equity definition, formula, examples, and explanation.

#### Return on Invested Capital

Return on Invested Capital (ROIC) is a profitability ratio that compares a company's NOPAT to total invested capital. Learn how to calculate ROIC, the importance of the metric, and how investors interpret ROIC.

#### Debt to Equity Ratio

Debt to Equity Ratio is a leverage ratio calculated by dividing a company's total liabilities by shareholder equity. D/E Ratio is a measure of financial risk.

#### Debt to Asset Ratio

Debt to Asset Ratio is a leverage ratio calculated by dividing a company's total debt by total assets. D/A Ratio measures the firm’s financial risk and leverage.

#### Inventory Turnover Ratio

Inventory Turnover Ratio is an efficiency ratio that measures how well a company manages its stock of goods. The calculation is cost of goods sold divided by average inventory.

#### Asset Turnover Ratio

Asset turnover ratio measures a company's balance sheet efficiency. Learn more about asset turnover ratios, formulas, and definitions.

#### Shopify Integration

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#### Custom Shopify Dashboards

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#### QuickBooks Online Integration

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#### QuickBooks KPI

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#### QuickBooks Analytics

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#### Key Performance Indicator

Alluxo combines all the features you need to create, track, and share KPIs. Get started today with your first 10 KPIs free forever.

High-performing teams use business OKRs to drive real results. Learn how business OKRs can create value for your departments.

#### 7 Ecommerce OKRs You Need to Track

The 7 must-have ecommerce objectives and key results (OKRs) for each part of your business. Use data to manage your ecommerce store with less stress.

#### What are Ecommerce OKRs?

It’s hard to build a DTC brand. This free guide on ecommerce OKRs will help you cut through the noise and measure your progress against clearly defined goals.

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#### OKR Dashboard

Learn about objectives and key results (OKRs), what makes a good OKR, and how to create your first OKR dashboard. Alluxo is a software platform to build custom business dashboards.

#### Accounting Dashboard

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#### Finance Dashboard

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#### KPI Dashboard

Track metrics like the top performing ecommerce stores.