Calculating Business

How do you know if your business growth rate is good or not? If your business is growing at 20%, how do you know if it’s a good growth rate or not? But wait, where did you get this 20% number from? From sales? Or from earnings? Or from cash flow? This is what this… Continue reading

Let’s say you start a new business and buy inventory worth $80,000. During the first month, you sell all of that inventory for $100,000. This means your gross profit margin for the month was 20% ($20,000/$100,000). This is Scenario A. Now, consider another Scenario B where in the first month, the $80,000 inventory got sold… Continue reading

Working capital, as the name suggests, is the capital that keeps a business running. Something that’s “working”. Hence the name. Capital of a business is nothing but the difference between assets and liabilities. Assets are anything a business owns that’s expected to give future benefits. Example: machinery, building, furniture, inventory, trade receivables, cash, etc. Liabilities,… Continue reading

Imagine you’re a business owner and want to buy a product in bulk. For this, you approach a supplier who quotes you $105 per unit of that product. The $105 price is after charging tax (VAT/GST) of 5%. That means the $105 includes VAT/GST of 5%. Now, you may be interested in knowing the price… Continue reading