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March 12, 2019
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May 27, 2019
To Improve Your Cash Flow, One is The Number
Every business has a seven financial principals that underpins the way they operate from a financial viewpoint.
Not knowing your principals is like walking through a maze blindfolded. These consist of the four drivers of profit and three drivers of the balance sheet.
The four drivers of profit are:
- Price
- Volume
- Direct costs/Cost of Goods
- Overheads
The three drivers of the balance sheet are:
- Accounts Receivable days
- Inventory days
- Accounts Payable days
They are the drivers that management should have some control over. Business improvement is driven by changes to these drivers.
