Break even analysis, defined as the studying the path to the point where a company is neither losing money nor making a profit, is very important to the survival of any start-up business. Perform it for either products or the business as a whole. The break even calculation can be in reference to pro or
Monitoring a company’s performance using ratio analysis and comparing those measures to industry benchmarks often leads to improvements in company performance. Not to mention these ratios are often part of loan covenants. The following article provides an overview of the 5 categories of financial ratios and links to their description and calculation. Use the following
All of us have used cost allocation as part of our Financial Services offerings since it is required by GAAP. Cost allocation is the process of assigning common costs to ending inventory and cost of goods sold (COGS). Our goal has been to either reduce taxes or increase reported earnings, but this all depends on
Accountants are often great at, well, accounting, but tend to get lost in the detail, preferring to count expenses down to the paper clip level instead of focusing on what truly matters for a company’s profitability. Nowhere is that more evident than in the chart of accounts they create. What are some common problems in
An article published recently in the Journal makes the case that smaller companies should pay attention to certain economic indicators, such as the Producer Price Index (PPI), unemployment rates, and consumer confidence. Yet most smaller companies take what the market will bear, and sell and buy in markets which are impacted by much more narrow
Most CFO’s cut costs to obtain profitability for the company. In a recession, that is often the best course of action. The question is: what kind of knife do you use? A meat cleaver or a scalpel? Should You Cut Marketing Expense in a Recession? Marketing costs are a prime target for the CFO’s slashing
Communicating simple accounting and finance measures to colleagues can be a challenge. Take, for example, gross profit margin percentage and mark-up percentage or simply margin versus mark-up. To non-finance professionals, these two measures may seem to be interchangeable. But they’re not. Mark-up percentage is generally a marketing measure used in pricing decisions made by marketing professionals.
Recently came across an article in the London Times about how to approach financing a startup or new business. Overall it’s a pretty good summary of the basic dos and don’ts. Do know what you can do without today. Negotiate with your suppliers so that you can get better terms on your payables, such as
During a downturn in the economy the overriding goal of the Chief Financial Officer and management team is to defend the bottom line or profitability of the company. At a minimum you should achieve break even. The economy ebbs and flows like the tide. During the good times a company should generate profits and pay
Creating a flash report is an essential part of being a financial leader. Managers and ownership often ask CFOs and controllers, “how are we doing?” While this seems like a simple enough question, there lie many devils in the details. The key is to be able to communicate above the details while being neck-deep in
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