In the strict sense of the Definition of Finance said that all activities are carried out analytically, management, optimization, management and use of money within an economy that is moving at the same money.

In the sense of the importance to a business, financial formulas should be the bone marrow of an institution, which is analyzed in detail all the variables of the movements of money, and the results that would lead to take one decision or another.

In more colloquial, Finance figures are all the Business throws when in operation, are all data from sales, expenses, costs and everything that implies a movement of resources and at the end of the day is translates into money.

Of course everything that moves within a business is money, from matter Primea, employees, managers, computer, data, including intangibles such as brand or business name.

The financial formulas can give the essential data of Entrepreneur Business such as:

- Liquidity, used to measure the immediate capacity payment is collected according to its cash flow

- The Solvency measures the ability, Business to meet its debts

- The Debt, that measures the level of debt compared to the separate property of the Company,

- The profitability, which tells us how successful our business and being the profit margin is leaving us.

This basic knowledge should be rooted in the daily life and mind of the entrepreneur know the guidelines that should be taken or measures to be taken to a given situation.

The importance of the Business Finance

No small thing comes to managing the finance concepts within a business, be aware that everything that moves is money, should be subject to analysis and measurement, or at least all the essential parts and of importance to the Company.

Take care that the debts do not exceed the capacity of Indebtedness the Company, monitoring sales are maintained at an optimum level to achieve at least cover the costs of business, or monitor the workforce is optimal not to have a payroll too high for what is produced, are details of a Business Finance should be clear for analysis by the business owners.

Be very clear that a business should not exist without Finance shall be the number one priority of an entrepreneur or business owner, and failure to do so, no doubt is intended to waste or financial laziness, this, no data with which to make sound decisions, of course, sooner or later this would lead to an imminent bankruptcy business.

This is the real importance of financial formulas within a business, having the tools necessary in figures and numbers that reflect the current situation and that consequently allow us to make good decisions in real time, either to make profitable to the business or in many cases to remove him from any financial crisis.

The entrepreneur or business owner as such must be clearly aware of the importance of taking their daily Finance, I have explained the consequences of not doing so, and large benefits obtained when dealing with it well.

The Definition of Business Finance gives us a guideline to recommend that every business should at least have basic knowledge of this sensational discipline anyone who wants to be truly successful in business have to worry about and deal to learn all the concepts that are part the essential financial task to run a business.

And you as a businessman or business owner you already know the basics in Finance? If you do not have them you should not wait any longer, your business can be in urgent need.

This metric based on profitability, tells us how much free cash flow a company generates in relation to what would comprise an investor buy the entire company.

Expressed in the simplest way to divide the free cash flow by enterprise value. The enterprise value is the market capitalization of the company over the long-term debt minus its cash.

The objective of this ratio is to measure how efficiently a company is using its capital (including debt) to generate free cash flow.

We can see a practical example (taken from data from Morningstar).

Coca-Cola in April 2005 had a market capitalization of $ 100 billion with a long-term debt of $ 1.2 billion. It also had the then $ 6.7 billion in cash on its balance sheet. (more…)

As already presented in previous articles about the accounting terms. Accounting is called the language of business because it is a tool to deliver financial information to parties who need it. The better we understand the language, then the better our decisions, and the better we are in financial management. To convey such information, the accounting reports are used or what is known as financial report. The financial report of a company usually consist of four types of reports, namely the balance sheet, income report, report of capital changes and cash flow report.

Balance Sheet, is a systematic list of assets, debt and capital on a particular date, which is usually made at the end of the year. Referred to as a systematic list, because the balance sheet is based on a particular order. In the balance sheet can be known how many of the company’s assets, the company’s ability to pay obligations and the ability of the company obtained additional loans from outside parties. It can also be obtained information about the company’s debt to the creditor and the amount of existing owners of investment in the company. (more…)