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Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine, Second Edition
book

Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine, Second Edition

by Michael E. Gordon
September 2009
Beginner content levelBeginner
299 pages
8h 16m
English
Wiley
Content preview from Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine, Second Edition
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Project Your Growth and Profitability
Assets are everything that is owned by your business, and that is owed to
your business.
Liabilities are everything that your business owes, including debts and claims
that creditors have against the assets of your company.
Net worth is what the business is worth after all liabilities have been satisfied.
Exhibit 16.2 is a typical balance sheet format. The balance sheet can be
thought of as a summary report on the results of a medical examination of your
business. Is your business healthy or unhealthy? The healthiest businesses have
robust assets and net worth and minimal liabilities. The weakest businesses are
just the opposite: skimpy assets and net worth and life-threatening liabilities.
As a rule of thumb, the ratio of total current assets to total current liabilities
(known as the current ratio) is used by lenders as an indicator of a company’s
ability to repay loans. For safety, the current ratio should be greater than 2.
Another widely used measure of the company’s relative debt burden is the
ratio of total liabilities to net worth (known as debt to equity ratio). This ratio
should stay well below 1.
The Income Statement
This financial statement lets you know, or predict, how much money you are
making from the actual operation of your business. It provides a straightforward
tool for measuring whether your company is profitable or unprofitable by
comparing ...
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Publisher Resources

ISBN: 9780470467183Purchase book