Tuesday, May 14, 2013

Is your business making money?

Is your business making money? 

Answer may be NO but you may not KNOW. Yes many businesses are just managing cash flow and not making profit. 

Is it your money that you are splurging on ? 

It may be of your creditors or banks or government. 

Is your networth positive after you writes off dead stock , dead investments , difference between book value and scrap value of your assets and bad debts ? 

Is your ROI more than risk free rate market return ? 

You may have money in bank but do you have assets value more than your liabilities? 

Take a critical look at your MANAGED financials.You may cook the book to fool government and investors but be cautions about your uncooked real books that is fooling you and taking speedily you on the road to bankruptcy.   

Many companies survive before they burst merely on the basis of positive cash-flow. Cash flow is critical but at the same time it misleads. It makes us believe that our business is making money. But unless you are vigilant on the above aspects of profit and loss and Balance Sheet , only positive cash flow dependency can be a disaster.

No comments:

Post a Comment