Why numbers are important to business?


Numbers today are too important to know, for many reasons to be aware about how to define your numbers in different categories and different ways, that should help you to classify your business from zero growing to one step or more movements, knowing your data and turned it to different graphs well help you to increase your efforts.

5 Keys to be aware about numbers and why it are important for business?

To help ensure that your business stays in the black, take the time to familiarize yourself with these five key useful numbers.

  1. Cash Flow, This figure is computed by subtracting your operating expenses from the money your company generates during normal business activities. To define the revenue and the part of using it, It includes depreciation to your net income from revenue and adjusts for working capital like receivables and inventory. So when it comes to be aware about more information about your cash flow and how to use it. When your operating cash inflow exceeds your cash outflow, this is a sign that you’re operating in the black. If the reverse is true, it’s time to take a closer look at your income and expenses.

  2. Net Income, which is an important part or key of your company’s income (sales and revenue) minus expenses during a specific period of time, which is generally quarterly, every six months or yearly, which you prefer!. Knowing your company’s profit and loss over time allows you to project earnings and make realistic plans for the future, both short term and long term.

  3. Price Point, pricing is something to focus and give it more space and flexibility to comparison with other companies “Small-business owners should know exactly how much it will cost them to purchase their goods and then what they'll need to sell those goods or services in order to make a profit,” says Petri, who notes that this is an especially critical number for restaurants and other retailers. “When you determine price point," he adds, "make sure to take into account all overhead expenses, such as utilities, payroll and sales tax.”

  4. Gross Margin, Also known as your gross profit—and related to price point—this figure reflects how much money remains after the actual cost of your merchandise is subtracted from the selling price. If this figure is low and not sufficient to cover your operating costs, such as salaries, rent, marketing and utilities, then you're likely not charging enough for your products and services.

Total Inventory, Monitor your inventory numbers on a weekly basis to ensure that the amount of inventory isn’t gradually increasing, as this could be a sign of sales trouble. By tracking inventory on a regular basis, you can spot problems early enough to avoid the negative effects of excess inventory, which include storage costs, reduced profits and potential waste. Understanding your critical financial numbers may not be as exciting as making a big sale, but keeping an eye on these must-know figures will give you precious peace of mind—and a glimpse of what the future holds for your business.

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