Posts Tagged ‘capital’

Sound Business Growth

If you want to grow a business don’t you want to do it in a sound method that actually improves the business? Say “Yes!” Trust me, you do.

What Are You Growing?

Typically the focus of business growth seems to focus on one of the following and perhaps more than one of them: Read the rest of this entry »

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Do You Really Need Debt?

How many small businesses with debt really need it? If you are a small business here are some things to consider.

A Faulty Assumption Perhaps

As I follow others thoughts I cannot help from but be surprised at how many think that in order to succeed in business they have to take on debt. What makes this interesting is that so many of these are start-ups or very young businesses. Reading between the lines, I have come to the conclusion that many have simply assumed they would have to borrow to start or Read the rest of this entry »

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Understanding the Debt Ratio

Most of my recent postings have concerned how businesses are financed and how to measure the returns on those investments. Understanding the debt ratio will help you better understand the financing of a business.

What is the Debt Ratio?

The formula for calculating the debt ratio is:

Debt Ratio = Total Liabilities / Total Assets

(Note that this is expressed as a percentage)

Using a sample balance sheet from an earlier posting, let’s see that calculation. Read the rest of this entry »

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Importance of Liquidity

In my last three posting, Necessity of Working Capital, The Current Ratio Matters and Quick Ratio Analysis we looked at three ways to asses a company’s liquidity. While working capital, the current ratio, and the quick ratio are useful liquidity measures, they may need some refinement. Let’s dig a little deeper and try to understand more about the importance of liquidity and why just the basic calculation of any of these may not be as helpful as we may have first thought. Read the rest of this entry »

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5 Tips About the Income Statement

I’m amazed at how often someone looks at their company’s income statement and immediately zeroes in on the bottom line; the net profit. Of course, the net profit is important, but if you stop there you will miss some useful information that can be obtained from this statement. Here are 5 tips about the income statement.

Patterns and Trends

It helps to dig into the individual lines on the income statement. For example, suppose you are a distributor. Take a look at Read the rest of this entry »

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3 Business Startup Essentials

If you’ve ever started a business or been involved in a business startup, you know the excitement it can produce. That excitement is a good thing as it helps energize those involved and promotes enthusiasm that is critical to the early life of a business. On the other hand, that same excitement can cloud peoples’ thinking and cause critical mistakes. In order to remove that risk and still keep the positives, there are some steps or business startup essentials that will help immensely.

Recognize a Reality

As much as we may like to think we do, we really have quite limited ability to visualize how our Read the rest of this entry »

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