Business Finance Essay - 705 Words

Understanding Your Business’ Finances: 7 Key Numbers You Need to Look At Most entrepreneurs focus on how they can make their products/services better, increase sales and earn a profit. However, business owners should realise that their income isn’t the only thing that they need to look at, as there are other important figures that they should closely monitor. Although a business may be hitting its sales quota, without looking at its key financial numbers the business might risk losing money instead of earning it. For example, if the sales price of a product sold is below the cost of selling it, the income from sales will not cover the expenses of running the company. To ensure that your business’ finances are on the right track, we†¦show more content†¦Figure out the key factors that are making your sales increase as this could help you retain the momentum. On the other hand, it is also important to analyse when there is a dip in your sales figures so you can make the correct adjustments. 5. Profit and Loss Statement – Your profit and loss (PL) statement is another crucial information tool to monitor as it provides you with a snapshot of the financial position of your business. This is calculated by subtracting the business revenue minus the expenses. If the number is positive, this indicates the business has made a profit, or if negative, then it means that a loss has been incurred. 6. Managing and Monitoring Inventory – Especially for retailers, it is essential to measure inventory every week. If you see an increasing inventory, it usually indicates that there is a sales problem. Regular monitoring of inventory will help prevent overstocking which leads to potential waste, and eventually, reduced profits. 7. The Quick Ratio – also known as ‘the acid test ratio’. The quick ratio is found on a business’ balance sheet and shows its financial stability. This number is measured by dividing the company’s current assets and its current liabilities. The ratio that you should end up with should be 1, which indicates that your business has more cash available than the current money it owes. Regularly monitoring these numbers can be tedious and not as exciting as making aShow MoreRelatedBusiness Finance Essay1901 Words   |  8 PagesMultinational Business Finance, 12e (Eiteman, et al) Chapter 1 Globalization and the Multinational Enterprise 1.1 Globalization and Creating Value in the Multinational Enterprise Multiple Choice 1) Which of the following are critical to a firm trying to reach the top of the firm value pyramid? A) An open market place. B) High quality strategic management. C) Access to capital. 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So the need for creditRead MoreBusiness Finance Dish Network Anaylsis Essay10003 Words   |  41 PagesBusiness Finance Term Paper Assignment 2 DISH Network Submitted by: Andrew Pelkey November 20, 2012 For: Mr. Joel Rossmaier I certify that the content of this paper was written by me and that all sources have been appropriately cited: ______________________________________________________________________________________ Table of Contents Chapter 1: Introduction †¦...†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 3 Chapter 2: Financial Ratios†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..5 * Liquidity ratios†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Read MoreTop 6 Personal Finance Software for Small Business Owners Essay examples881 Words   |  4 PagesTop 6 Personal Finance Software for Small Business Owners A personal finance software lets you track your budget, costs, and your overall finances. 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