See also: Quick Ratio Analysis Price to Book Value Analysis Price Earnings Growth Ratio Analysis Time Interest Earned Ratio Analysis Use of Financial Ratios Financial Ratios are used to measure financial performance against standards. Analysts compare financial ratios to industry averages (benchmarking), industry standards or rules of thumbs and against internal trends (trends analysis). The
See Also: Margin vs Markup Margin Percentage Calculation Retail Markup Gross Profit Margin Ratio Analysis Operating Profit Margin Ratio Analysis Markup Percentage Definition Define the markup percentage as the increase on the cost price. The markup sales are expressed as a percentage increase as to try and ensure that a company can receive the proper
Businesses call us for many reasons but here are two very common reasons why we get called… They are growing and want to strengthen the financial function. OR They are in financial distress and can’t find a way out. Why does a business need to be bankable? What does being bankable mean? In this blog,
See also: Hire For Traits, Not For Talent Corporate Zombies: Combat the Rise of Unengaged Employees Millennials: The Hippies of the 21st Century Turnover in Collections is Destroying Your DSO Cost of Turnover If you take a look at any company’s income statement, you will notice that one of the largest expense items is salaries
See also: Identifying Profitable Customers Segmenting Customers for Profit 3 Benefits of an Analysis of Customer Profitability Customer Profitability Definition The customer profitability definition is “the profit the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between the revenues earned from and the costs associated with the customer relationship
When you invest in leadership development, you are making an investment. It’s something that you pay good money for and expect a return on your investment. But what many leaders don’t realize is that leadership development should be strategic. We once had a coaching participant (CFO) who worked in a family company. Once the CEO
See Also: ROE (Return on Equity) ROIC (Return on Invested Capital) ROCE (Return on Capital Employed) Definition ROCE stands for Return on Capital Employed; it is a financial ratio that determines a company’s profitability and the efficiency the capital is applied. A higher ROCE implies a more economical use of capital; the ROCE should be
Over the years, we have asked our clients what business issues keep them up at night. Consistently, realizing profit potential was one of the top issues that kept business owners up at night. Is there money left on the table that hasn’t been realized? Is there potential that hasn’t been capitalized on yet? As a financial
Sales are great, but wouldn’t they be better if you were actually able to reap the rewards? Many CEOs that were not trained with an accounting/finance background struggle to understand profitability. They think that if sales are great, then the business is great. But when sales increase, inventory and overhead increases. Productivity also decreases –
When we talk to people who have sales or operations backgrounds, we quickly pick up on their hatred/dislike/disdain/etc. for accounting. We get it. Accounting can be boring, especially if it’s not used for management purposes. But when we talk with the management team either in our coaching workshops or our consulting practice, we always implement
Last week, I talked with several lenders, investors, and entrepreneurs. One of the topics that kept coming up was their client’s problems wasn’t cash – even though their clients tried to convince them of it. While cash was an issue that needed to be addressed, the problem instead lies in the leadership. A few weeks
Larry is operating a lemonade stand, and he thinks that his lemonade is the most valuable drink available. Because he interprets his lemonade as highly valuable, he decides to charge $85 for a glass of lemonade. Larry wonders why no one buys his lemonade. Although he may seem highly profitable when you work out his
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