It is all about performance

One may not always be able to control what one earns, but one can definitely do something about what one spends. This can make a great deal of difference both in corporate and personal financial health. A company which judiciously practices cost-cutting without hampering the productivity is the company that can deliver strong financial results. As many of us have seen while reading annual reports of various corporations, some companies seem to bring in revenues from sales that increase year after year and yet the net profit margin remains stuck at the bottom of the chart without showing much sign of gathering any steam anytime soon. That is depressing. While others operating in the same sector seem to produce much better net profit margin from a comparable levels of sales. To arrive at the net profit margin figure, several deductions have to be made from sales. They are: cost of goods sold, administrative expenses, marketing costs, taxes etc. Therefore, a management team that promotes and integrates company-wide cost-cutting efforts into the psyche of its company is a team that would go far. Net profit margin is simply obtained by expressing the earning after tax as a percentage of sales. Return on invested capital and return on equity are also important performance measures. All these ratios and numbers are readily available in any of these financial websites. Therefore, it would be worthwhile to look at these numbers and see where they would fit in the scheme of things. When investment analysis enters meditative phase, you begin to see all the parts assembled into one whole structure – a company represented by pure numbers.

Is money the root of all evils today? Do you agree?