What is Return on Sales?

Return on Sales… Asset Turnover… Return on Assets The reason we put these three together is because they relate; the first two multiplied together give you the third. These three ratios hang together as a triangle, but each must be … Read More »

What is Shareholder Equity?

If you were to sell off everything in your business at book value and pay off your debts, how much cash would you be left with? That’s shareholder equity. In other words, shareholder equity is the amount of the business … Read More »

What is Working Capital?

At its bare bones, “capital” is wealth. But as the definition is fleshed out, it becomes clear that not all kinds of capital are alike. Working capital (also known as net working capital) is the amount of funds needed to … Read More »

The Ludic Fallacy

Watch Out for the Ludic Fallacy: Don’t Let it Spoil Your Business Simulation Game Experience Written by Nikolai from Income|Outcome Humans have been modeling life with games since at least the First Egyptian Dynasty and have been using what they … Read More »

What is Gross Margin?

Today’s word involves your profit—sort of. “Gross margin” is one of those tricky terms defined differently by every business. But at a basic level, “gross profit” is the money earned from a sale minus the direct costs of that sale … Read More »