Meta Search Engine Navigation

Look For It  

Looking At Business Profits And Losses

by Adam Heist


You will be focusing on what your prospect worries about every single day. Frame your discussions around your understanding of these, and you become a "trusted advisor" rather than just a sales person. You can learn to analyze the data that you get just by reading through the company's website. There you can get a really thorough financial breakdown, more thorough than in the 10-K report filed with the SEC.

Then when you meet with an executive, you can get the conversation to revolve around his specific challenges. "It looks like your penetration strategy has yielded solid results. How are you dealing with the challenges of your top line increasing 36 percent year over, while gross margins tighten?, instead of dealing with generalities. You force your mind to study a group of five or so metrics. In this case, you have the balance sheet. Break it down into five categories: the fixed assets, the net working capital, the long term debt, changes in goodwill and intangible assets and leverage. You can define leverage as the total assets divided by the total equity. The trend in top line growth is one thing they obviously want to see this trending up.

Most all CEO's watch the sales numbers closely. The fact of the matter is many Wall Street analysts look for growth on the "top line" as much as they do on the bottom line. The trend in gross profit margin is a way to quickly see how the company is performing relative to its internal productivity and the market is to look at the gross profit dollars as a percentage of revenue, or gross margin. . Ideally, this trend should at least match the percentage increase in top line growth. You can also look at the operating profit margin to get a quick view of how the company is performing.

While the gross margin number tells us market conditions and the direct labor productivity of the company, the operating margin tells us the general overhead productivity of the company. Increasing interest expense puts an additional earnings debt on the company. Companies that incur debt to acquire businesses or invest in businesses need to make sure that these investments return more than the company's cost of capital. Net margin needs to be analyzed within the confines of the entire business. If operating margins stay the same year over year, but net profit margin increase, something happened in between that needs to be analyzed.

Information About The Author

Adam Heist is writer for the loans website, a new trend called accordia has been stirring up quite a commotion. Visit us today to find out why.

Published by Meta Search Engine LOOK-4IT.COM.

You can reprint this article for FREE at your web site. Doing this you agree to keep all texts and hyperlinks unchanged.

Please keep reference to LOOK-4IT.COM meta search engine as well, if you decide to use this article as a free content for your web site.

Back to article category: Business

Additional Business Articles

Principles of Prosperity
There are those who are rich and then there are those who are not. What is it that makes the difference? It isn't intellect because I know one too many fools who are wealthy

Raising Capital for Your New Business Explained
Then, there are those businesses that lose money year after year, and it can be a mystery how they continue to amass investment capital and continue to grow.

Understanding How to Look at a Business
Understanding whether a business is doing well or poorly, is not a transparent thing.

Do Your Profits Pay for all Your Overhead?
Business people can fool themselves often about what their profits really are. Profits are not only cash available that you can spend as salary and reinvest in a business.

Relating a Company Statistics to Its Operation
There is a lot of material out on the information highway on what companies are doing.

Home  |  Submit Article  |  Link to Us  |  Directory  |  Free Content  |  Contact Us  |  Privacy Policy  |  Terms of Use

Copyright © 2005-2006, LOOK-4IT.COM. All rights reserved.

All trademarks, icons, and logos, shown or mentioned at this web site, are the property of their respective owners.
The information in the articles is provided without any warranty and must by used by the reader at their own discretion.
A professional opinion should be sought before taking any of the advice.