A MBA in marketing later, I was still meandering about my financial ABC’s. Most of us are usually foxed by balance sheets, income statements and break even analysis. And yet if you want to be a store owner, or run a technology firm, it’s important to have basic skills in finance to survive business cycles. […]
Finance for Non-finance Managers
Financial Statements: Structures and Relationship
Though it is said organisations have an indefinite life, in reality they do have a particular life cycle. These are birth, growth, plateau and finally no growth or decline. This is not unlike a product life cycle. In periods of slow growth, product extensions are introduced to increase its life span. Similarly, companies need to […]
Understanding Balance Sheets
Choco-Bloc Company makes chocolate for retail and takes custom orders. To understand a balance sheet better, let us take a look at the elements of their balance sheet. Current Assets: These are assets that are cash or cash like. They provide liquidity. Cash is the most liquid of assets. The company’s current account, cash reserves […]
Understanding Income Statements
A lot of things hinge on a company’s profit. Profits determine bonuses, dividends to share holders, timely repayments to banks and an important measure to attract investors. How is the income statement made? By sales we mean the revenue the company makes by selling its products or services in the market. Cost of Sales: This […]
Understanding Cash Flow Statement
The cash flow statement of a business tells us about the movement of cash in the business based on the changes in the balance sheet and income accounts. The cash flow provides a good indication of the financial health of the company. By looking at the cash flow statement, the management can identify issues with […]
The Significance of Cash Flow
If a company has a high demand for its product, the product has high margins, makes purchases and pays on time, shows an increasing trend in profits, the business is a hit, right? Well, not always. In most business’ cash is used to buy raw materials, produce value added goods, buy assets and turn it […]
Key Performance Indicators of a Business
A company’s numbers can be analysed and help assess its performance from more than one dimension. When compared against a benchmark it can be seen if a company is doing well or not. These performance metrics help measure: Financial Status and Net Worth Profitability Financial Leverage Productivity The measure of Financial Condition and Net Worth […]
Cost Accounting
To understand if a product is truly profitable all costs have to be accounted for. Every cost accounted for shows if a profit is made in that product line. More often than not, companies look at making profit through volume sales. This is a fallacy.
Plan your Business
Planning is an important part of doing business. At the outset it may seem time consuming and not entirely useful. Good planning often leads to effective management of resources since everything is taken thought of ahead.
Three Finance Concepts Every Manager Should Know
Here’s the thing. You’re doing great in your career and by looking at your performance your boss has promoted you to be the manager for your unit. You’ve got a great salary hike but it has also resulted in a whole lot of added responsibility. Now, you’re not just an employee who had to prove […]