Financial management in the company requires knowledge of various key figures
When you have a business, it is extremely important that you have control of its economy and can keep an eye on the health of the economy. For many companies, the economy is a benchmark for whether to manage the business in the right way or whether to start doing some things differently.
Advantageous to pay attention to various key figures
For this, it may also be advantageous to pay attention to various key figures in the company’s finances, so one can form an overall overview of how it goes in the company’s finances. The following is just a very small selection of the many key figures that you have to control, in a good business economy. If you need good advice on business transfer, you can find help on this site.
The company’s earnings ability is important to keep an eye on
It is important to keep an eye on your company’s earnings ability, and this can be done, among other things, by examining the company’s rate of return, which tells about the company’s ability to make a profit in relation to the amount of capital invested. If this is a good economy, the return will be higher compared to the investment, and this key figure is also often used to tell something overall about a company’s finances.
However, one must be careful to compare the rate of return across companies and industries, as there are different levels, challenges, etc. in the different industries. In addition, it may also be advantageous to keep an eye on the equity business, which is the interest rate that the owner or investors will receive in return on the amount of capital that has been invested, and this can be compared with the deposit rate, for example.
Hereby you can see what the owner or investors get out of having money invested in the company. If you have good numbers here, it will also be easier to get investors into the company.
Pay attention to the company’s relationship between costs and revenue
If you have a good company with a healthy economy, you will usually also have a good degree of coverage, and this coverage shows how much of the turnover in the company goes to cover the company’s fixed costs. Here, it is a question of having a high degree of coverage, as it shows that you are good at managing the fixed costs. However, it is also important to keep an eye on what to aim for financially in a company.
For example, one can look at the zero-point revenue, which gives a picture of how large a turnover one must have per year to get a result that ends in 0. Thus, you get a picture of which turnover you as a minimum must do to be able to cover all of the company’s costs. With such information in mind, it is also easier to put a good budget for the company and make planning in the production.