What does the term net worth mean? And why is it something a business owner should pay attention too? The actual definition of net worth is: total assets minus any total liabilities. Unfortunately, this is not helpful to those unfamiliar with accounting terminology. Let’s take a closer look at this. Net worth is a combination of money [...]

Debt is a word that many business owners do not want to use to describe their financial position, yet managing and monitoring debt is a task that small business owners tend to avoid. In general, debt that is due and payable within the next 12 months is called Current Liabilities. Paying these debts will probably [...]

Potential investors, lenders, stock holders, and business owners all like to know how well a company is doing financially. One way to determine the financial performance of a company is to review the Balance Sheet. The Balance Sheet is basically a snap shot of the items a company owns, owes and the difference between the [...]

In my last two posts I discussed the financial tool, Net Present Value (NPV) in detail (NPV and NPV Example). However, often times the Payback Period method is used to evaluate a purchase or expansion project. The difference between NPV and the Payback Method is that the Payback Method doesn’t discount the future cash savings/cash [...]

In my last blog post I discussed a financial tool, Net Present Value (NPV). In this post I’ll use an example of how NPV works. You can refer back to this information whenever you need to make a large purchase decision. In order to perform the calculation you will need to know: 1. The discount [...]

They are predicting a very slow economic recovery. But that doesn’t mean you should wait to make purchasing decisions for your business. On the contrary, you should buy that asset — if you do so wisely. It can be challenging to determine whether or not you should make an investment. You make every effort to [...]

Financial statements are intimidating so it is no surprise that many business owners do not even attempt to calculate financial ratios. Accounting and finance are two courses most students try to avoid or at least struggle to get through, especially when your instructors require you to memorize ratios. But, ratios can help you identify trends [...]

You have heard the saying before, “Cash is King!” A friend of mine used to tell business owners they need to know how much money they have in the bank everyday. While this is good advice, I think many business owners focus too much on cash and not the business activities that bring in or [...]

Whether in your business or personal life, I’m assuming you have all thought about creating a budget at one point. Many people set limits on how much money they will spend each month on eating out, entertainment, etc. Businesses are doing a lot of this too. A friend of mine recently shared with me that [...]

It is interesting how “things” happen. While I was preparing for my Management class, where we discuss ethics, diversity, etc., I read a request on HARO about ethics in accounting firms. I responded to the request with a few of my comments and many of them were published in this short post on SocialYell. The [...]