SHOW & CHAPTER 14: PERFORMANCE OF COMPANY ASSETS - WILLIAM EASTMAN

​Before we can determine where to add value to a company we need to identify the value of current assets. The answer you are looking for is your ROA - Return on Assets. The math is simple and it is nothing more than an extraction from your balance sheet. Once we know how well your investment into tangible and intangible assets perform, it will present the next question - what do I need to do to increase its value or what do I need to add to realize the full potential of my processes. The question is for next week.

Summary
The production of a product or service requires the investment in equipment, what are your capital investments to date to determine effective usage. How much did the equipment cost (don't consider platforms you lease or subscribe to), what is its life cycle before replacement, how often does it need to be serviced professionally (costs), what are costs incurred in your preventive maintenance system, what are the warranties/guarantees, does it require manufacturer training.

EPISODE 65: Creating Value Through Tangible Assets
Today's show will start on the easier part of the problem - Tangible Assets. Here is a list of what is considered a Tangible Asset and the information is available on your Balance Sheet. This list is not inclusive of everything you potentially have, just what exists in most small businesses.

Topics:

• Cash
• Accounts Receivable
• Contracts
• Equipment
• Tools
• Furniture
• Real Estate
• Inventory
• Pre-paid Insurance

EPISODE 66: Calculate Tangible Asset Based Value
Now that we know what is considered a Tangible Asset and where to find the information, we can determine its performance. There are many ways to compute how well these investments have performed and we have selected the easiest. 

Topics:

• Balance Sheet
  • Total Liabilities + Owners Equity = Total Assets
• Debt to Assets Ratio
  • Total Liabilities / Total Assets = Debt to Assets Ratio
• Return on Assets
  • Income / Assets = ROA

EPISODE 67: Creating Value Through Intangible Assets
Just like we did with Tangible Assets, the following list is what is typical of Intangible Assets in a small business.

Topics:

• Trademarks
• Copyrights
• Patents
• Domain Names
• Employees
• Brand
• Goodwill

EPISODE 68: Calculate Intangible Asset Based Value
This is a little more difficult and we are going to take the indirect methods. That is accomplished by looking at the company's pre-tax performance and isolating how much more you made that is not accounted for by ROA.

Topics:

• (Your ROA X Industry Average ROA) - Pretax Earnings = Intangible Asset Brand Value 

Next Show/Chapter 17: Operating Costs

How to apply today's show to your business:

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