Recently, the Federal Reserve made the decision to increase the federal funds rate with an intent to continue to raise interest rates. Though higher interest rates may help to curb inflation overall, increased interest rates can cause business owners to face a number of challenges.
Best Practices to Manage Your Company’s Working Capital Ratio
As a business owner, it’s important to consistently be aware of metrics that determine the likelihood of your company’s ability to meet its financial obligations, weather an unexpected downturn, or handle a crisis. Generally, the two metrics given most importance are cash flow and working capital, the latter of which will be addressed below.
Measuring your company's profits is a crucial routine process that's necessary not only for reporting purposes, but for prudent decision-making. Keeping track of your profits will allow you to optimize your pricing models, know which products and services to focus on, prioritize functions of your business, and generally have a better grip on managing your business.
