mmmmm! Sounds good doesn't it? This evening was spent partly getting to grips with various profitability, liquidity and investment ratios, partly forgetting what I was talking about half way through a presentation. Repetition, big wavy arm gestures and a moderate amount of verbal incontinence do not great speechmaking make. Still, at least it's out of the way now!Turns out that accountants have ratios to measure all sorts of things about a business - from how good they are in days at paying debtors and receiving from creditors, to whether a company's swimming up to its eyballs in debt, or shifting stock faster than my brother shifts beer. All this information can be used to compare performance with other companies.
My dad tells me that in a small business he prefers to use common sense to work out if things are going right - a quick look at your balance sheet and P&L is enough to give you a feel for if life is good, or if you're in a bad place. (Couldn't resist)
No comments:
Post a Comment