Financial Tools

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 [...]