Turnaround is possible for all Business EntityTurnaround of loss-making business entity into profit – making business entity requires prudence in financial management. Prudential management requires that the business entity is to percolate down ROI to the bottom level of the business entity. This can happen if the activities of all the people of the business entity result outflow of cash which results inflow of cash and the difference between the inflow and outflow is more that the time value of money. Moreover, financia
Turnaround is possible for all Business EntityOn analyzing the table as stated in the post dated 06.07.2016, the person tries to find out the Period when the duration of operating cycle was minimum alongwith the inflow and outflow of cash during that operating cycle The period when earning was maximum due to lesser amount of outflow of cash along with the operating cycle time and inflow of cash during the operating cycle; The period when earning was maximum due to maximum amount of inflow along with operating cycle and o
Turnaround is possible for all Business EntityWe determine earnings periodically. That does not mean that the earnings have occurred on that date on which we calculate the earnings; rather earnings have occurred during the whole period of time i.e. on all days of the period of time, but we become aware of it at the end of the specified time. For better financial management, the expected earnings are broken down into smaller period of time and actual earning is determined for those smaller periods of time to know whether
Turnaround is possible for all Business EntityOne thing can be found that the activities are limited within current assets and current liabilities which establish that the profit is the return on working capital. It can also be observed that the outflow of cash, resultant inflow of cash and the duration of one operating cycle is not uniform. For turnaround of a loss-making business entity, the business operation of a round of business cycle which resulted Minimum duration of operating cycle; Minimum outflow of cash; Maxi
Turnaround is possible for all Business EntityIt is evident that cash goes out of the business entity for procurement of resources which is consumed by activities performed for manufacturing of products or rendering of service and comes back when customers make payment. It can be observed that the process is cyclical in nature and for that reason business process is also stated as operating cycle. Each component of the business process has its own duration because of its own loop. The aggregate of the duration of all com
Turnaround is possible for all Business EntityThe business entity must have to earn competitive advantage and for that purpose at the stage of turnaround, differentiation is not possible as the entity is stuck in the middle. The only option for the business entity is to earn competitive advantage in the form of ‘COST’. Cost advantage can be earned if the activities performed by the business entity are relooked as stated in the blog dated 01.07. 2018 contained the ways in which money goes out of business organisation and
Turnaround is possible for all Business EntityAll the five items interplay in a circular manner but each item has its own loop. Raw material is purchased, is sued to production and again purchased and so on. Finished goods have also its’ own loop. Production increases inventory and delivery to customers decrease the inventory. Customers are debtors and the debtors have its’ own loop. Debtors increase on sale of products to customers and decrease on receipt of payment from customers. This can be shown in the following way