Financial efficiency
Nitesh Garg
General Manager - Procurement | Strategic Sourcing | De-risk Global Supply Chain | Strategy to execution
"Profit margins too thin? Here’s how you can still hit a strong ROI! ??"
In my last post, I talked about how Weighted Average Cost of Capital (WACC) plays a big role in business success. Today, I want to go a bit deeper into two key rules:
1?? Your profit % should be higher than WACC
2?? Cash from assets should flow in before your liabilities are due
Other things to keep in mind:
?? Don’t use short-term assets to fund long-term purchases
?? Understand your operating leverage
?? Always sell for more than your variable cost
?? Borrowing can be smarter than equity funding
Question for you: How can a business with just 2% profit margins still generate a strong ROI of 26%? ??
Looking forward to your insights!