Net Worth

What does the term net worth mean? And why is it something a business owner should pay attention too? The actual definition of net worth is: total assets minus any total liabilities. Let’s take a closer look at this. Net worth is a combination of money invested by the business owner and an accumulation of [...]

Net Present Value

They are predicting a very slow economic recovery. But that doesn’t mean you should wait to make purchasing decisions for your business. On the contrary, you should buy that asset — if you do so wisely. It can be challenging to determine whether or not you should make an investment. You make every effort to [...]

NPV vs Payback Method

Often times the Payback Period method is used to evaluate a purchase or expansion project. The difference between Net Present Value (NPV) and the Payback Method is that the Payback Method doesn’t discount the future cash savings/cash inflows for the time value of money. The formula for the Payback Method is: payback period = initial [...]

The Importance of Current Liabilities

Debt is a word that many business owners do not want to use to describe their financial position, yet managing and monitoring debt is a task that small business owners tend to avoid. In general, debt that is due and payable within the next 12 months is called Current Liabilities. Paying these debts will probably [...]

Year End Budgets

Year end planning is not complete without a budget. Creating a budget can be intimidating to many business owners, but it does not need to be. Simple, yet effective, budgets can be developed using MS Excel. One of the main reasons business owners procrastinate budgeting is because they do not know where to start. The [...]