Why shouldn’t companies use equity for working capital requirements?

Companies requiring funds can categorize all their requirements essentially into two buckets, debt financing and equity financing. Typically, debt financing involves borrowing funds from a bank or from the general public by issuing bonds. Equity financing includes selling shares of stock or taking on additional owners. The one common mistake entrepreneurs make is thinking that these …

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Head & Tail Categories – Selection, Turnover (GMS), Margin and Rotations

Retail management is all about the rotation of capital. To emphasize the importance of rotations, let us take an example: Let's say I have Rs.10,000 to invest in my business and I am reasonably good at making sofas. So, I invest my Rs.10,000 in raw-material and labor and make a sofa costing me Rs.10,000 (exhausted …

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ROI of a distributor or supplier – business turnover, margins and rotations (in e-commerce and FMCG)

Retail excites me a lot because it is a simple business of buying and selling goods and yet it covers almost every complexity under the sun. It has a complex supply chain from raw material to finished goods, yet seeming so simple and convenient when we add items to our shopping cart in offline and …

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Working Capital Management and Profitability

Working Capital is the total of the amounts invested in current assets of the company. Net working capital results from the deduction of current liabilities from current assets; Working Capital Management consists of determining the volume and composition of sources and uses of working capital in such a way that would increase the wealth of …

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