Month: April 2019

Price to Sales Ratio: A Poor Indicator of Value

The price to sales ratio is a marginal valuation ratio at best. It is really an offshoot of an antiquated concept of valuing a business. In the past, one of the more common methods to value a business deal was to use a multiplier of sales. The price to sales ratio used with business ratios is similar. Simply stated, the price to sales ratio is the entire market value of the company (the price) as a function of revenue (sales).

Hard and Soft Costs With Construction

Tangible and Intangible Meaning

All hard costs are directly assignable to a job.  These costs are most often tangible in nature, but there are many intangible costs that can be directly assigned to the job.  Thus some intangible costs are ‘Hard’ costs. A contractor must understand the difference between hard and soft costs in order to properly markup assignable costs to determine the final sales price of the project built.

Performance Ratios

Performance Ratios

The most common thought among business owners, consultants, investors and students is the ‘bottom line’.  The proper word is of course ‘PROFIT’.  In business, the single number one reason to operate is to make a profit. 

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