Tag - Financial Ratio Analysis

Are you concerned about the financial information you are receiving? Not sure where the problems are stemming from? Financial ratio analysis provides you with this information by analysing the data contained within your Balance Sheet and Profit & Loss reports. Make financial decisions and provide correct information to any involved external parties. Monitor your ratio analysis on a monthly or quarterly basis. This will allow you to put out any financial fires before they take hold. There are a number of types of financial ratio analysis – Gross Margin Ratio, Liquidity Ratio, Working Capital Ratio amongst others. Measure Cash Flow and ensure that your business will have the funds to pay bills when they are due. Even take a wage for yourself.

How the Profit Flywheel Accelerates Your Business

This is the 12Faces structured roadmap to growing your business. We use the flywheel to explain the structure of the material. It is one of many possible roadmaps to growth. Use it as a suggestion tool to incorporate into your business planning. Yellow Belt

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How to Benefit from Cash Conversion Cycle (CCC)

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...

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How to Use Gross Margin Analysis

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...

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How Gross Margin Analysis Boosts Profit Explained

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...

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Overhead Margin Analysis Explained

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...

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Benefit from Labour Efficiency Ratio Metric

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...

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Learn about Daily Sales Outstanding Metric

Summary cashflow is the life blood of a business but it is a difficult thing to grasp as an abstract idea.  "Is my cashflow OK?" is difficult to answer.  Effective management of Accounts Receivables is part of the answer.  The  Accounts Receivable Daily Sales Outstanding (DSO) ratio, and its partner, the Daily Accounts Payable...

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How to Protect the Wealth your Business Generates

Your business is likely to represent a big part of your personal wealth.  Learn how to protect the wealth your business generates. Getting your wealth together is a lifetime of work so the last thing you want to happen is to lose it because of some foolish decision or unexpected...

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Change your Accounting Mindset with Throughput Accounting

Throughput Accounting (TA) comes from the same stable of business thinking as the Theory of Constraints TOC and is a different way of accounting for a businesses success.  It is a major rethink on how to position your business for success.See the Skills Module introduction: Theory of Constraints (TOC)   Blue Belt

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How to Measure Net Cashflow

Cashflow is the lifeblood of any business. If the speed you collect cash owing to you is slower than the rate you pay it out to your suppliers, you are going to find it increasingly difficult to find the money to pay your suppliers.  Unless this is rectified, you stand a...

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