Effective incomeis any income that the Federal Housing Administration (FHA) uses to qualify a borrower for a mortgage. It’s often the gross income that is found on tax returns and may include salary, hourly wages, overtime pay, tips, commissions, and more. Effective gross income (EGI) rel...
Effective gross income is important to factor because it helps investors determine whether or not a property makes enough positive cash flow to cover expenses. Said a different way, EGI is important because it informs investors how much income the property will actually generate and is a crucial ...
The income effect is a term used in economics to describe how consumer spending changes, typically based on price of consumer goods. Given the same income, consumer habits and quantity of items desired tends to be affected by price of those items. A person making a given salary tends to hav...
The income effect indicates that the higher one’s income is the more they tend to spend. This is why people with high salaries tend to buy more luxury goods. However, the substitution effect comes into play when the person’s income may be threatened or if they perceive a negative outlook...
Passive income is a term that’s used to describe several forms of revenue generation. One type of passive income is earnings from investments, like an Airbnb rental property, dividends, interest on savings, or leasing a piece of equipment that you own. ...
Effective Budgeting Knowing your net annual income is necessary for effective budgeting. Once you know how much you take home each year and each month, you can accurately plan for expenses, savings, and investments. This helps you live within your means and avoid overspending. ...
The payment required by a government that is unrelated to any special benefit or services received from the government. 三种税率 平均税率 (Average tax rate):Totaltax÷Taxableincome 实际税率 (Effective tax rate):Totaltax÷Totalincome 三种税率结构(Tax rate structure) ...
Operational efficiencymeasures how well profits are earned as a function ofoperating costs. The greater the operational efficiency, the more profitable the firm orinvestment. This is because the entity is able to generate greaterincomeor returns for the same or lower cost than an alternative. In ...
Both revenue and net income are useful in determining the financial strength of a company, but they are not interchangeable. Revenue Revenue is the money a company generates before any expenses are taken out. It only indicates how effective a company is at generating sales. It does not tak...
The effective interest rate of a bond is usually the market interest rate and the bond’s yield-to-maturity (as opposed to the interest rated stated on the face of the bond). The effective interest rate of a bond is the rate that will discount both the bond’s future interest payments...