Archive for the ‘Business Acumen and Metrix’ Category

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One of the most important keys for a company’s profitability and cash generation is Inventory Velocity. If you understand this relationship you will be on your way to financial success. So what is inventory velocity?

“Inventory Velocity – How many times during the year does the inventory turn over? Total sales divided by the value of inventory is the equation used to determine the velocity of inventory turnover.”

While the financial people will understand this definition, how well do the sales people and inventory buyers understand this rule? Here is the rule of thumb: Continue reading ‘Understanding Inventory Velocity – Business Acumen 101’ »

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Posted by Voss Graham on March 6, 2009 at 5:00 am under Business Acumen and Metrix.
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Yesterday, I discussed the impact of negative cash flow and how it can create major disadvantages to an organization of any size. The effects of a negative cash flow can range from a loss of competitiveness to placing a company in bankruptcy court.

Today, I want to talk about the impact of positive cash flows on an organization. Since Cash is King – then it becomes simple to understand that a positive cash flow creates cash. So, what are some of the effects of a positive cash flow. The following are the key impacts of a positive cash flow:

Continue reading ‘Business Acumen 101 – The Effects of Positive Cash Flow’ »

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Posted by Voss Graham on March 5, 2009 at 5:46 am under Business Acumen and Metrix.
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In the world of Business Acumen or how money is made – Cash is King. In fact, the generation of cash is the most critical element for organizations. Every small business knows this and in this economic downturn some of the largest companies in the country are learning this lesson – the hard way.

Okay, it’s time for another term definition:

” Cash Generation – the difference between the inflow of cash and the outflow of cash.”

As you can imagine after reading the definition that you can positive or negative cash flow. This becomes the focus of determining cash is King. A negative cash flow can deplete cash reserves and create a myriad of problems for any organization. A positive cash flow can build your cash reserves – which provide options to management to gain advantages in the marketplace.

What are the problems that can happen with negative cash flow? Continue reading ‘Business Acumen 101 – Cash is King’ »

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Posted by Voss Graham on March 4, 2009 at 5:30 am under Business Acumen and Metrix.
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I want to start the Business Acumen series with a basic discussion point: Sales Growth. This has become the top subject in many offices and board rooms due to the recessional impact by the economy. Every executive is focused upon increasing revenues. It has become the number one thing keeping them awake at night. While I will discuss this point, I want to share the balanced approach to looking at Sales Growth – since their are companies that are still growing even in this economy.

Sales Growth is one of the first things you should be looking at to understand the culture within the company. There are three variables for you to consider when reviewing growth. First, you can have growth; Second, you can have a declining sales trend; and Third, you can have no growth or no change in sales volume. The key is watch the trends. One year is never enough to assess the progress of a companies sales. Several years of sales (Five years is best, three is a minimum and for large public companies – 10 years) One of the best sources for public company data can be found in Yahoo Finance.

Trend showing Growth over a three to five year period. There are several questions to ask regarding a growth company. Continue reading ‘Sales Growth is the Starting Point’ »

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Posted by Voss Graham on March 3, 2009 at 5:52 am under Business Acumen and Metrix, Sales.
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Okay, after reviewing my Google Analytics I noticed that my readers really enjoyed reading about business acumen in my Becoming a Sales Superstar series. So being a believer of data and customer response levels, I decided that over the next couple of weeks I will provide more information on this vital topic.

To start, I want to define a few terms for everyone:

“Business Acumen – the ability to understand how any company or organization makes money.”

“Profitability Growth – the ability to simultaneously increase sales and profitability at the same time.”

“Financial Analysis – Understanding the fundamentals and building blocks of an organization. Then connect the dots for analyzing growth, performance, productivity and profitability.”

During the series on Business Acumen, I will share information that is important to executives, managers and sales people. The top performers understand how to calculate the information to judge opinions, make decisions regarding projects, and to evaluate performance of individuals, groups, teams, divisions and the whole company. This is serious information, yet, I will keep to my goals of making things simple and fun to learn.

Come visit during the week or everyday. You can link to the site and have the RSS feed deliver the daily posts to your newsreader of choice. Sales Managers, use this series to educate your B2B sales teams – they can use it to win more sales. Enjoy the daily posts on Business Acumen.

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Posted by Voss Graham on March 2, 2009 at 5:34 am under Business Acumen and Metrix.
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