Tag: Capital Allocation
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Capital Allocation Part III: Return on Capital
We’re wrapping up a 3-part series (here’s part I and part II) on capital allocation – the effective use of profits and cash flow – with a concept called Return on Invested Capital (ROIC). [Sometimes just called return on capital or ROC.] First, a quick reminder of our balance sheet – we buy or build assets for the purpose…
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Capital Allocation Part II: Cash Sources and Uses
Sources & uses of cash This is Part 2 of a series on capital allocation. A quick recap from last week: We defined the 3 uses of profits as capital allocation. They are: Where we left off was how to assess capital allocation… let’s cover one of the best methods for evaluating capital allocation, a tool we refer to…
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A Small Business Capital Allocation Guide
In any business (that’s any industry, any size, any product), there are generally only 3 ways to use profits: Most finance pros refer to this mix of profit usage as capital allocation. What does capital allocation actually mean? Capital is just a fancy word for money, and it can come from a few sources, but mostly cash generation…
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Weekly, Monthly, Yearly? Which Financial Period is Right?
There are probably 30-40 skills required to be a finance/accounting pro, but to manage a successful business you really only need to master maybe 10 or so… today we’ll cover one of those 10 skills… I call this zooming in and out on your business. It will help you see the bigger picture (zoom out) and…