Balance Sheet
Assests vs Liabilities
2:1 ratio is a healthy business
example: $10 million is current assets vs $5 million in current liabilities. ratio is 2:1
Pre-tax profit
Pretax profit needs to be greater than 5% to start bonus program
After tax profits
So 100% of gross profit
- 20-40% goes to taxes
- 10% working capital – replacing equipment, inventory,
- 5-10% – bonus program
- owners draw