Earning power: how to justify borrowings and expansions

Article Abstract:

It is advisable to know how to calculate a company's earning power. The earning power is the operating profit margin multiplied by the operating asset turnover. The operating profit margin states how much is acquired for every sale made. It shows how operating assets such as cash, inventory and receivables are positively used in the business. It is an added advantage to know how to determine one's earning power for it gives one an idea on how the management handles its assets. it can also come in handy when obtaining money and planning an expansion.

Analysis, Investments, Loans

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45 big planning ideas for 1995 - in all the big money areas

Article Abstract:

Financial planning pointers for business owners on how to reduce taxes and defer tax payments, increase cash flow and improve personal and business equity are offered. Aside from generating savings, these tips can also help in protecting one's assets and lowering risk. Regarding corporate matters, business owners are advised to keep corporate minutes accurate and current and think about shifting to S corporate status or a limited liability corporation. In family matters, custodial accounts are advised to ensure children's education.

Management, Personal finance

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Earning power: how to justify borrowings and expansions

Article Abstract:

The Earning Power formula allows corporations to assess the viability of taking out a loan. This involves multiplying operating profit margin with operating asset turnover, to determine whether assets are being used to generate sales and profits. This analysis of assets provides investment ideas for the company and insight on the amount of interest the company can afford.

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