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Business By Design
Business by Design is the podcast for owners who want to start, scale or exit a business. Each week, Stuart Wemyss and Mena Abraham unpack the four things every business must get right: value, engine, reach and team. Using the VERT flywheel, they show how these fit together to build a business that runs without you, and how the choices you make inside the business flow through to your personal wealth, lifestyle and exit options. Every episode is short and to the point, with no fluff and no sales pitches.
Business By Design
Ep 53: Key financial ratios to measure the health of your business
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In this episode, Mena and Stuart discuss several financial ratios that you can use to monitor the health of your business, including:
There’s no point having a good accounting system if it doesn’t give you useful and actionable information to help you improve your business. Ratios allow you to quickly assess what areas need your attention.
- Profitability: gross margin, net (EBIT) margin (inc. salary for you), revenue per employee, earnings & revenue growth, return on assets
- Cash flow: Average creditor/debtor days (debtor days should be < creditor days), Cash Conversion Cycle, cash interest coverage ratio
- Assets: working capital ratio, stock turnover ratio, ROI
- Industry/business specific: whatever is your key success factor e.g., profitability ratios by service line and/or product category, etc.
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SPECIAL OFFER: Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog here.
Work with Mena & Stuart's team: At ProSolution Private Clients we encourage clients to adopt a holistic and evidence-based approach when making financial decisions. Visit our website.
Follow us: Stuart: Twitter/X and LinkedIn. Mena: LinkedIn
IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.
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