Working capital equals the difference between current assets and current liabilities. Organizations need a certain amount of working capital to run their operations smoothly. The optimal (or “target”) amount of working capital depends on the nature of operations and the industry. Inefficient working capital management can hinder growth and performance.
When the COVID-19 crisis exploded in March, among the many concerns was the state of the nation’s supply chains. Business owners are no strangers to such worry. It’s long been known that, if too much of a company’s supply chain is concentrated (that is, dependent) on one thing, that business
Timely, relevant financial data is critical to managing a business in today’s unprecedented conditions. Similar to the control panel in a vehicle or machine, dashboard reports provide a real-time snapshot of how your business is performing. Why You Need a Dashboard Report Everything in a dashboard report can typically be
The economic fallout from the coronavirus (COVID-19) pandemic has forced business owners to reevaluate their operations and make difficult decisions. One place to look for the information you need to make rational, reasonable moves is your financial statements. Under U.S. Generally Accepted Accounting Principles, these typically comprise a statement of
Working capital is calculated as the difference between a company’s current assets and current liabilities. For a business to thrive, working capital must be greater than zero. A positive balance enables the company to meet its short-term cash flow needs and grow. And, too much working capital can be a
In financial reporting, investors and business owners tend to focus on four key metrics: 1) revenue, 2) net income, 3) total assets and 4) net worth. But, when it comes to gauging short-term financial performance and creditworthiness, cash flow is what counts. If a business doesn’t have enough cash on
Time flies when you’re busy - and running a business means you're busy all the time! Although we are still a few months from the New Year, it's not too early for to start doing some business strategic planning for next year. Here are a few ways to get started.
Michael D. Brooks, CPA | Grand Junction, Colorado Depreciation is a reduction in the value of an asset over time resulting from wear and tear, deterioration or obsolescence. The tax law acknowledges depreciation by allowing taxpayers to take deductions over a period of years. The number of years
Life presents us with many choices: paper or plastic, chocolate or vanilla, regular or decaf. For businesses, a common conundrum is buy or lease. You’ve probably faced this decision when considering office space or a location for your company’s production facilities. But the buy or lease business equipment quandary also
How do profits and cash flow differ? Business owners sometimes mistakenly equate profits with cash flow. Here’s how this can lead to surprises when managing day-to-day operations — and why many profitable companies experience cash shortages. Working capital Profits are closely related to taxable income. Reported at the bottom of
