Posts Tagged ‘equipment’

Spend to Cut Costs

Although spend to cut costs may sound counter-intuitive, there is sound logic to it. Let’s dig a little deeper.

First, this is in no way referring to some of the loony ideas you may sometimes hear to Read the rest of this entry »

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The Latest is Not Always the Greatest

We live in a time of constant change. As a result of this and effective marketing, some companies get people to buy things they don’t really need. What do I mean by that? Read the rest of this entry »

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Real Assets

Can you identify real assets when you see them? This question may not be what you are thinking. This posting relates to a similar one called When an Asset is Not an Asset.

Aren’t All Assets Real?

Stop for a moment and consider some of the things categorized as assets on the balance sheets of various companies. These may include, among other items: Cash and Short-Term Investments, Accounts and Notes Receivable, Prepaid Expenses, Fixed Assets (Land and Buildings, Furniture and Equipment, Leasehold Improvements, etc.), Long-Term Investments, Patents, Goodwill, and other items.

Now, on the face of it there is really nothing wrong with Read the rest of this entry »

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Unplanned Obsolescence

We’re all familiar with the concept of planned obsolescence, but what about unplanned obsolescence. Planned obsolescence is when a product is designed to have only a limited life because it becomes outdated due to loss of functionality, appearance, customer appeal, or perhaps simply wears out. In general, planned obsolescence is somewhat intentional, the idea being that customers will either have to or desire to replace a product when is becomes obsolete. Read the rest of this entry »

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Why Debt Ratios Matter

If you don’t have a handle on your company’s debt you may find yourself without a company. Here are a few things to consider.

Types of Debt

There are two sources of capitalization for a company. One is owner equity and the other is debt. First let’s consider debt.

Debt may be in a number of forms, with bank loans to bonds being among them. An asset-based loan could be from a bank or other financing organization and Read the rest of this entry »

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Balanced Approach to Financial Management

I remember a partner in a small CPA firm telling a story from early in his career. He said he had been given the task of creating a balance sheet for a client. When it was in balance he declared, “It balances, so it must be correct.” Of course the balance sheet must balance, but he quickly learned there was a lot more to it than that.

Balance Does Matter

One of the first areas where a company often displays a lack of balance is on the importance of the different financial statements. The income statement shows the results of activities over a specific period of time, while the Read the rest of this entry »

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Justify Spending

Does your company have a way to justify spending? If so, have you realized that there may not be one all-encompassing way? If not, the why spend?

A Little Background

One of the first times I encountered this after college involved justifying expenditures for capital equipment. Actually I don’t even remember what method was used. It could have been return on investment (ROI), time to recover the cost through expense reduction, discounted cash flow or some other method. The point is, though, they did at least have some method in place to justify capital expenditures.

Years later a client would not even entertain the idea of justifying equipment purchases. The only method this particular client used was somebody said they needed it or Read the rest of this entry »

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Unsustainable

Unsustainable

Author Chris S – Your Small Business CFO

Unsustainable – It’s a word with such a negative connotation. It also is a word heard often in regards to the debt of the United States and the on-going out-of-control spending. But what does that have to do with business? Before we look at that let’s first Read the rest of this entry »

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Current or Long-Term Debt

There are many ways for a company to get into financial difficulties. One that is very common is misuse of debt. In a past blog, the risk of allowing accounts receivable to become overdue was discussed (see 3 Reasons Past Due Receivables May be Worthless). Also, in the blog posting 80/20 Rule for Receivables Management a way to help manage receivables was discussed. Another leading cause of financial distress is the mismanagement of inventory. See 3 Low Cost Sources of Cash – Part 1 for an example of the impact of this.

The problems of excess receivables and inventory are relatively easy to understand. But, the misuse of debt is a little more hidden.

What Kind of Credit Problem?

When people think of credit problems they are normally thinking in terms of Read the rest of this entry »

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Think Used

Everybody loves getting something new. Admit it, even if you are as cheap as they come, you love getting something new, especially if it is something needed or really wanted. But, what if you have to buy it for your business? Does it need to be new? I alluded to this issue in a post several months ago called The Big 4 Capital Users.

Who Are You Trying to Impress?

I am convinced that businesses often buy new business equipment to impress others (well, maybe themselves as well). But, here are the questions. Will that new desk or filing cabinet or computer workstation, or whatever work any better than a used one? Do you really think you need to make this kind of impression? Read the rest of this entry »

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