Gross Margin Analysis opens the door to understanding the complex interactions between Revenue, COGS (Cost of Goods Sold or Operating Expenses) and Gross Profit. It can be hard to understand why (e.g.) Revenue is going up but Gross Profit is going down! Gross Margin also lets you measure the operating...
Two Thirds of an Iceberg is Hidden Under Water!Sadly, your accounting system is probably not making valuable information very obvious.You have to do accounts for tax and compliance purposes.You think this is just an expense you have to live with.But, properly diagnosed, these accounts can tell you much, much, more...
Critical Business Financials Explained provides a commentary on Tips that appear in the 12Faces TrendBoard family of analysis tools
How fast can you grow your business? This depends on how well you convert your sales into cash-in-hand. Is this conversion slow? You will need cash from other sources to fund your growth in sales volume and pay expenditures. Some expenditures will be for goods and services, others for capital items. The Cash Conversion Cycle...
A healthy cashflow is a major contributor to your business’s ability to survive and grow. Do you want to harness the power of your cashflow to grow your business? Are you struggling to pay bills when they fall due? Speeding up cashflow can help with both these goals. Cashflow Acceleration discusses how you can...
Overhead Margin relates to Overhead Costs, which are the costs in your business that do not change directly with a change in your Revenue and/or a change in your Cost of Goods Sold (COGS). They include such things as: Rent, insurance. Interest. Salaries of permanent staff. Administration costs in general; telephone, office costs. Some elements of the...
Gross Margin Analysis: Lets you diagnose problems caused by changes in Income and/or Variable Costs. Income and Variable Costs can move in different directions, or in the same direction, at different speeds. This can make it hard to work out what is causing an upturn or downturn in your business. The analysis tips here...
Cashflow refers to the flow of money through your business. It usually goes out so you can buy stock and pay expenses, like wages and rent, and comes back when you sell that stock and collect the money from the buyer. Profit is an accounting term trying to show income less expenses....
One of the powerful lessons we can learn from Legendary Cashflow wizards is how they use “other people’s money” to painlessly finance the rapid growth of their businesses. Amazon grew gangbusters for many years using its suppliers’ funds; and it did it without paying income tax. It’s well worth seeing if we...
The cost of labour is one of the largest overhead expenses in most businesses. Any inefficiency here is an expense that must be recovered from the potential Profit of the organisation. Labour tends to grow of its own accord and it is very difficult for the business operator to know just how...