EBITDA Explained: Cash Profit, Risks, and Real Business Insights
What is EBITDA? Simply put: Earnings Before Interest, Tax, Depreciation & Amortisation. It will often be referred to as the ‘cash profit’ of a business as it reflects the core financial performance of a business, excluding non-cash items and costs related to financing or tax. Components of EBITDA Tangible vs Intangible Assets Defined Both amortisation […]
Understanding Productivity Factor
What is Productivity Factor? In simple terms, your Productivity Factor measures how much gross profit your business generates for every $1 spent on administration wages and associated costs. The formula is straightforward: Productivity Factor = Gross Profit Dollars ÷ Admin Wages (plus super and related costs) Gross Profit Dollars = Revenue – Cost of Goods Sold (COGS) […]
Linear vs Stepped Expenses Explained
Most businesses think about costs too simply. They split them into fixed and variable, direct and overhead. That’s fine for your accountant’s ledger — but it’s not enough if you actually run a business. If you want to control costs like a real CFO, you need to understand how they behave as your business grows.That’s […]
The Procurement Balancing Act: How to Stop Stock from Draining Your Cash While Keeping Sales Alive
If you’ve ever felt like your warehouse was doubling as a museum of forgotten stock, you’re not alone. In every manufacturing, construction, and wholesale business I’ve worked with, procurement is one of the trickiest roles to get right. Your procurement manager sits at the crossroads of operations, finance, and sales. They’ve got one foot in […]
Finance Fundamentals: Return on Capital
The Ultimate Efficiency Metric for Business Leaders When you strip back the noise of business performance, there are a handful of financial metrics that genuinely tell you if your company is working as hard as you are. One of the most powerful, and one that too many business leaders overlook, is Return on Capital (ROC). […]
What Is EBIT? A Simple Guide for Business Owners
What is EBIT? Simply put: Earnings Before Interest & Tax EBIT is a critical metric used to evaluate a business’s performance because it focuses purely on operational profit, excluding variables such as interest and tax. It’s commonly used as a baseline reference when comparing business elements like return on capital.
What is Cost of Goods Sold (COGS)? Definition, Formula & Examples
What is Cost of Goods Sold (COGS)? Cost of goods sold, known as COGS for short, are the wholesale expenses associated with producing and delivering goods or services to a business before it adds its margin and creates sales revenue. It’s the sum of all direct costs associated with making a product, both producing and […]
Working Capital Explained Simply
What is Working Capital? Working capital the difference between current assets and current liabilities. It serves as a benchmark to gauge a business’s cash requirements for growth and day-to-day operations.
Gross Profit Explained Simply
What is Gross Profit? Gross profit is the amount of revenue your business makes after subtracting all the costs required to make and sell its products or services. It captures how much your business has sold (the revenue) and all the inputs, both variable and fixed, that go into making what it manufactures or provides. […]
Understanding and Managing Your Business’s Debt to Equity Ratio
What is Debt to Equity?