10 articles
Before signing a five-year lease on bigger premises, test your sales forecast against reality. This guide uses a £500,000 forecast to show how sensitivity analysis reveals breakeven points, hidden risks, and whether your fixed costs can survive a slower-than-expected first year.
Two business units, each with £400,000 tied up in assets, can look equally matched until you calculate Return on Capital Employed. This guide walks through a worked ROCE comparison, shows how a van purchase temporarily drags down the ratio, and explains why tracking ROCE trends beats judging a single year's snapshot.
Before approving a £120,000 CNC machine purchase, one number matters more than the sales pitch: the discount rate. This guide walks through calculating Weighted Average Cost of Capital (WACC) using a real SME example, showing how blending the cost of debt and equity reveals whether an investment truly creates value or quietly destroys it.
When a lender asks about interest cover and gearing, do you know what they mean or how your numbers measure up? This guide breaks down both ratios with a worked example, shows how to calculate them yourself before applying for finance, and explains what to do if your figures are not strong enough yet.
Profitable on paper but short on cash? This guide explains free cash flow versus accounting profit, then walks through a full worked example with a fictional joinery business to show exactly where the money disappears to.
A supplier says the new machine pays for itself in three years, but is that reason enough to spend £120,000? Learn how payback period, NPV and IRR work together to test whether a capital purchase genuinely creates value, with a full worked example and the accounting entries behind it.
Revenue alone can mislead you about which products deserve your attention. This guide explains contribution margin and margin of safety through a worked CVP example, showing SME owners how to spot which products truly convert sales into profit and how much of a cushion their business has before hitting breakeven.
Turnover growth can hide a shrinking margin. Learn how horizontal and vertical analysis work together to reveal the real trends and structure behind your financial statements, with a worked SME example.
A rising ROE can mean genuine operational improvement or simply more borrowing. DuPont analysis splits return on equity into profitability, efficiency, and leverage so SME owners can tell which force is really driving the number before a lender or buyer asks.
Profitable on paper but perpetually short on cash? The cash conversion cycle reveals exactly how many days your money is trapped in stock, unpaid invoices and supplier terms – and shows precisely where to act. Using a worked example from a bespoke furniture maker, this guide walks through calculating DIO, DSO and DPO, and turning those figures into real, freed-up cash.
