Question Which of the following statements best describes the difference between “point in time” and “period of time” in financial statements? A) “Point in time” refers to a specific moment, while “period of time” refers to a range of moments.B) “Point in time” refers to a range of moments, while “period of time” refers to a specific moment.C) “Point in
When excitement strikes, write it down. It’s easy to go hour by hour throughout your day. Day by day. Week by week. I hate when people tell me “how soon time flies.” Time flies when we do not give attention to it. When we go through the motions day-in and day-out, we are living life on a whim. I have
In business, there is a tradeoff between focusing on short-term and long-term financial performance. Companies can choose to generate short-term cash flows. How so? Sell what sticks today. Sell high margin products. Cut back on operating expenses. Reduce capital expenditures. This helps (i) expand margins and (ii) increase free cash flow generated. But a sole focus on generating high-levels of
Here’s a new formula for you. A formula I try to preach day in, day out through my writing. OUTPUT = MIN (MINDSET , SKILL SET) What does this really mean? Simple. You are only as good as the lesser of your skills or mindset. If you have no limiting beliefs, your output is limited by your skillset. If this
Why do we divide earnings by the number of shares outstanding? We know that we cannot compare earnings of one company to another because that does not tell us how cheap or expensive a company is. Just because DropoutEdu has $100M in net income and UnlearnEdu has $50M in net income, we cannot conclude that UnlearnEdu is cheaper. It could
Share count is completely arbitrary. Just because a company has more shares than another, does not mean it is bigger. Just because a company has fewer shares than another, does not mean it is smaller. Why? Because the value of equity of a company is a function of two things. (i) Share price (ii) Shares outstanding Just because there are
It’s not worth explaining. This might juxtapose what you would expect to hear from me. As an educator. Isn’t my job to teach and explain things in simple and intuitive ways? Yes. But, I am not referring to teaching in the traditional sense. I am talking about explaining the unacquainted. I have learned the hard way – I cannot change
Flexibility leads to value. Imagine that you have an assignment due at 11:59pm. That assignment is worth 50% of your grade. It is currently 11:00pm and you haven’t started. You are panicking. Say I am the professor of that class. How much would you pay me to give you the option to submit the homework 1 day late? Well, you
Why do asset-light, IP business trade so high? In recent years, the separation of asset-heavy from IP business units has increased. This phenomenon is known as Nikefication. Nikefication was pioneered by, hint, Nike. This operational strategy separates design from production and distribution. Corporations adopt a decentralized approach by outsourcing various functions like production and distribution to contractors. By separating the
Does competition stifle improvement? Last night, I was running a mid-distance workout. On my third split, I had a thought come to mind that I jotted down after the workout. When I used to run competitively in high school, I resented running. It was extremely painful because I was very competitive. I wanted to be the best long-distance runner in
