Friday, October 23rd, 2009
Phase 3 is characterized by high growth and rising leverage, as during the years 1997 to mid-2000. In this period M&A activity was rapidly accelerating, driven by a major focus on the creation of shareholder value. While earnings grew in this period, aggregate measures of corporate profitability like the ratio of after-tax profits of the nonfinancial corporate sector to GDP already declined. Deteriorating free cash flow measures also signaled heightened risk in the corporate sector. As one would generally expect in the expansion phase, equities performed well while credit spreads widened. In general, the high level of debt accumulated during the expansion makes companies vulnerable to economic downturns. Low growth and rising leverage increase the risk of defaults and rating downgrades, and are generally negative for credit as well as equity markets. The years 2000–02 are a typical example for this phase.
Tags: inheritace, insurance, Interest, joit, last will, Market, market cycle, market cycles, rate, tenancy
Posted in companies, credit cards, customer demand, developers, employee, equity, expenses | Comments Off
Monday, August 3rd, 2009
That’s good—as a beginning. Now, you need to get into details, by asking a few questions and coining up with solid answers:
Of course, you may want to set ancillary goals in each of these areas. But beware of goals that set department against department, worker against worker. For example, goals for marketing, which are measured in terms of sales, might cause resentment if there are other factors that could affect sales—just as sales goals might not be met because an improvement in efficiency caused a drop in the quality of the products the sales reps are trying to sell.
Tags: benchmark, CEO, economy, sales
Posted in customer demand, employee, expenses, funds, payments, profitability | Comments Off
Friday, July 31st, 2009
If cash flow does become an issue, it’s obvious that the company will have to change the way it’s doing business if
it wants to survive. Does that executive plant service still come in once a week to water the ficus and all the other office flora? As a manager, you may have to cancel the service, buy a $2.98 watering can, and start doing it yourself—or maybe just get rid of the plants altogether.
That may seem a little obvious, but it’s amazing how many businesses fall into comfortable patterns during good times and don’t see them as unnecessary frills when cash becomes tight.
Tags: cash dynamics, cutting costs, payment plans, preserving cash
Posted in business patterns, cash demand, customer demand, developers, online bank | Comments Off
Thursday, July 30th, 2009
The size, nature, and complexity of a business may indicate up to one, two, or three years of losses before the business starts turning a profit in new ventures. Managers won’t know for sure until they have some operations time behind them and have begun retool-ing based on what the market is really like, rather than on what they think it’s like. Once managers have an understanding of what customers think of their products and services, they can make more realistic predictions about expenses, income, and profitability to minimize the chances of getting into a cash crunch.
Tags: business, cash crunch, productivity, profit
Posted in customer demand, developers, finances, management | Comments Off
Thursday, July 30th, 2009
That’s good advice for any department head, no matter what the level of financial involvement. R & D managers might find need for additional research into other avenues affecting market or product, making additional expenditures necessary. Sales managers might suddenly be directed to fire several staff, incurring the cost of training and reduced productivity as part of these unanticipated changes. The product developer may find a need for more complex and expensive equipment, may see a sudden increase in the cost of raw materials, or may suddenly face new legislative restrictions on production.
If either of these individuals or companies haven’t made plans to protect their enterprises and reserve against such risks, then the demand for their product won’t really matter, because they won’t have the resources to meet that demand.
Tags: cash flow, productivity, profit, sales
Posted in accounting, customer demand, developers, payments | Comments Off
Wednesday, July 29th, 2009
At one point product sales may be brisk and revenues over cost of goods sizable. There is no problem there. Then suddenly demand will pick up and costs will escalate—a by-product of needing more of everything to increase production and keep up with increased demand. Just about that time, a major creditor will run into a snag and will have to slow up payments.
Suddenly the company is caught in a cash crunch—more money is going out than is coming in when it’s needed. Then the company doesn’t have the capital it needs to help meet customer demand. Despite having a highly profitable profile on paper, the company isn’t receiving funds in the timely manner that it needs to pay its bills. Think of it like this: You just ordered a new car because you won $25,000 in the lottery. The dealer wants the money, but the lottery officials just told you that they can’t send the check for three months. Uh-oh.
Cash flow problems happen to all of us from time to time. If you plan sufficiently, you may avoid many of those rapids, but not all.
Tags: bank payment, cash flow, floats, management
Posted in customer demand, money spending, online bank, payments, real estate | Comments Off