Content Marketing Trends for 2012: What's in and What's Out

No doubt about it: 2011 was a big year for content marketing. A recent survey conducted by my company, HiveFire, found that 82% of B2B marketers today use content marketing. And twice the number of marketers implement content marketing vs. the number of those who use print, television, and radio advertising.

Those numbers speak for themselves. Marketers have taken note, and are recognizing content marketing as a valuable component of their overall strategy.

With so much attention focused on the progress that content marketers have made over the past year, it's impossible not to ask what 2012 might bring. Because the content marketing space is moving so fast, here is a quick look at what's in and what's out in 2012. Messaging
What's Out: Passing Off Marketing Materials as Content 


Companies that were new to content marketing last year have learned that to attract customer interest, they have to be prepared to offer relevant and engaging content, not just marketing materials. Gone will be the days of marketers singularly promoting their brands without also keeping an eye on industry news and trends.
What's In: Incorporating Your Brand's Message Into a Larger Story
More and more, marketers will incorporate their brands' messages into a larger, overall story. Content produced by companies will begin to take on a more journalistic feel, and those marketers that are really getting it right won't shy away from curating content from their competitors as well.
Channels
What's Out: Traditional Content Channels
In 2011, we saw the decline of existing content channels (e.g., RSS feeds) and the shift to new content vehicles (e.g., Twitter). Increasingly, readers who seek content are moving away from sites, such as traditional news websites, in favor of more real-time social media channels.
What's In: The Next Big Thing
My prediction for 2012 is that we will continue to see emerging content channels steal the spotlight from more-established news media. A new online channel (think the Google+ of 2012), a new physical channel (2012's answer to the tablet), and a new medium for content (the next infographic) are all on the calendar for the next 12 months.
Curated Content
What's Out: Stealing Content From Other Sources Without Proper Attribution
Companies that repurpose third-party content as their own without properly citing the source aren't reaping the full benefits of content marketing. Linking to the original source may drive traffic away from you momentarily, but doing so makes you more credible for identifying relevant content in other well-known publications.
What's In: Curating Content From Multiple Sources, Including Your Competitors

If your company's goal is to establish thought leadership in your industry by providing your customers with the most compelling and relevant content available, it will be impossible to do so without occasionally curating your competitors' content.
Search Engine Optimization
What's Out: Driving SEO by Content Alone
If 2011 taught marketers anything, it is that SEO is not driven solely by including highly searched terms in the content that they create and curate. Marketers that try to optimize SEO by writing their content based on search queries alone will see a decline in viewership. Practices like that frequently police themselves, and customers will search elsewhere to find meaningful content that is not obviously marketing focused.
What's In: Viewing Your Social Media Presence as an Extension of Your Overall SEO Strategy
SEO will continue to be a major goal for marketers in 2012, but marketers will start taking into consideration how their presence on social media channels can affect SEO. Search engines are starting to rely on social signals more when they generate results. So a company that is not generating content on a variety of platforms will be missing out.
* * *
If some people have referred to 2011 as the "year of content marketing," then 2012 will be the "year of specialization within content marketing." As content marketing continues to prove itself as a successful marketing strategy, the methods of implementing it will become more focused. Though content curation—the process of finding, organizing, and sharing online content—is one approach, it is not the only one, and new practices will continue to emerge.
Given the growth of content marketing in 2011, it might be hard to accurately predict where it will be a year from now. However, one thing is clear: Content marketing is not going away any time soon.

Read more: http://www.marketingprofs.com/articles/2012/6827/content-marketing-trends-for-2012-whats-in-and-whats-out#ixzz1jnWJWJ2Z

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DuPont Financial Analysis Model

DuPont Financial Analysis Model : A Process For Knowing Where to Spend My Management Time Tomorrow Morning After Breakfast

By

Kevin Bernhardt, UW-Extension, UW-Platteville, and

UW Center for Dairy Profitability

Our computer technology today provides wonderful opportunities to collect, manipulate, and process data including financial analysis data.  Sure, it gives a manager lots of numbers, but what do they mean in terms of where to spend my creative management time tomorrow morning after breakfast? 

There is no lack of ratios to calculate from financial data, each of which is a valuable piece of information to the manager.  The Farm Financial Standard Council’s sweet 16 ratios (recently expanded) have been a standard for years in helping farm managers evaluate their financials.  However over several years of teaching undergraduate students and Extension clientele I often found it difficult for people to wrap their arms around what the ratios were indicating and ultimately where to spend their valuable management time.  The challenge often led to indifference by the undergraduate students and a lack of seeing any value to go further by Extension clientele. 

The DuPont system for financial analysis is a means to fairly quickly and easily assess where the business strengths and weaknesses potentially lie and thus where management time may optimally be spent.  It is not the only nor the most thorough, but it is a fairly straight-forward and systematic means to drill back into the financial numbers to determine the source or lack thereof for financial performance.

A colleague, Gregg Hadley (UW-River Falls), summed up well the DuPont system in a recent article on E-Extension (The DuPont Analysis: Making Benchmarking Easier and More Meaningful, Updated June 10, 2009, http://www.extension.org/pages/The_DuPont_Analysis:_Making_Benchmarking_Easier_and_More_Meaningful):

If we are lucky enough to have the minimum number of financial documents needed to conduct a meaningful financial analysis (both beginning and ending balance sheets, either an actual accrual or accrual adjusted income statement, and a statement of cash flows), we are then inundated with pages and pages of intimidating numbers to sort through.

This gives many managers and advisers a justification not to give their financial records anything more than a passing glance. This is unfortunate. A good financial performance analysis should do more than inform about how a farm performed in the past. More important, it should provide the manager and adviser with insight regarding how to prioritize activities that will enable the farm to improve its financial performance.

The DuPont system has disadvantages as does any financial analysis system.  However, its advantage beyond simplicity of use is that it takes into account the major levers of firm profitability – efficiency, asset use, and debt leverage.

Anatomy of Profits

Before describing the DuPont system, consider the anatomy of profits.  The accounting equation is:

Total Assets = Total Debt + Total Owner Equity

As the accounting equation shows every penny of assets comes from one of two sources – that financed by debt (borrowed capital) and that financed by equity (the owner’s own money).  Assets can also be described by those that are capital assets versus short-term inventory or market assets.  Capital assets are longer-term investments (land, machinery, breeding stock, etc.) that are not sold themselves to make profits, but are put to work to produce marketable inventory that can be sold for profits (feeder cattle, eggs, etc.).  Inventory also includes inputs such as feed, seed, and fertilizer.

Businesses earn profits by mixing their labor and management with inputs and capital assets to produce goods for sale.  The DuPont system recognizes this recipe for profit-making and segregates it into three distinct components or levers:

1.      Earnings (or efficiency),

2.      Turnings (effective use of assets), and

3.      Leverage (using debt to multiply earnings and equity)

In the DuPont system one can drill back into these three levers to determine where profit performance is coming from and potentially determine where management time should be spent for improving profits.  Specifically DuPont measures:

1.      How efficiently inputs are being used to generate profits [Earnings]

2.      How well capital assets are being used to generate gross revenues [Turnings]

3.      How well the business is leveraging its debt capital [Leverage]

Figure 1 shows a graphic of the DuPont system.  It begins on the far right side with Rate of Return on Equity (ROROE).  High ROROE is the prize in the DuPont system.  ROROE is calculated as:

Net Income from Operations – Unpaid Labor & Management
Total Owner Equity

The financial manager can then drill backward to see where ROROE performance either is, or is not, coming from. 

Starting on the upper side ROROE, in-part, comes from how well the business is earning profits from its assets as measured by the Rate of Return on Assets (ROROA).  ROROA is calculated as:

[Net Income from Operations   +   Interest   –   Unpaid Labor and Management
Total Assets

It makes sense that the higher the ROROA the higher the ROROE.  In-turn, the ROROA comes from two components or levers of profitability. 

One is how efficient the manager is in turning inputs into outputs, or in a financial sense, how efficient the manager is in turning the gross revenue of dollars coming into the business into net profits that are kept in the business after all expenses are paid.  This is the “Earnings” lever and is measured by the Operating Profit Margin Ratio (OPMR).  The calculation is:

[Net Income from Operations   +   Interest   –   Unpaid Labor and Management
Gross Revenue

Interest is added back so that the measure you get is one that measures efficiency of operations regardless of the debt structure.   Debt structure effects will come into the system later.  In situations where there is unpaid labor and management it is deducted to recognize the value of the labor and management.  The more efficient you are in turning gross sales into profits that you keep the higher your Rate of Return on Assets and ultimately the higher your Rate of Return on Equity.

The second source of ROROE is how well you are using the assets of the business.  This lever is referred to as “Turnings” meaning how well you are turning assets into production and sales of product.  To use an extreme example, if you had a 300 acre farm (all tillable) that you left sit idle then your performance of turning assets into production and sales of product would go way down.  The “turnings” lever is measured by the Asset Turnover Ratio (ATO).  The calculation is:

Gross Revenue
Total Assets

The better able you are to use the assets you have to produce and sell product the higher the Rate of Return on Assets will be and the higher the Rate of Return on Equity.

The last lever is “Leverage,” which is also known as “Equity Multiplier”.  Before going further with the explanation of leverage, it is worth backing up a step and exploring the accounting equation again

(Total Assets = Total Debt + Total Equity).

Given this equation, which is true for every business, then any profitable return to the use of assets is a profit return to the assets financed by debt and to those financed by equity.  Equity is fairly straight-forward, if you invest $100 of your own money and earn $10 back then your equity has returned 10% (10/100).  For the return to debt it is a bit more complicated because you have to pay someone for the use of the debt – interest.  So, the question becomes whether or not the debt you have is returning a profit larger than the interest you have to pay for using that debt.  If it is then the leftover profit after paying interest is an additional return to your equity.  That is, if I’m paying 8% interest and my profit return on the debt is 10%, then I not only can pay my interest, but I have 2% leftover that I get to keep.  This 2% becomes and increase to my equity.  This is why the debt or leverage component of DuPont is sometimes called an “Equity Multiplier.”

It may seem an odd statement to make for some, but if you want to increase your ROROE then one way to do it is to increase your debt!  The trick is that the debt must be managed in a way that returns a profit greater than the interest rate.  If it is not then the equity multiplier still works, just in the wrong direction!

Ultimately the leverage lever is measured by the Debt to Asset ratio (D:A), which is calculated as:

Total Debt
Total Assets

For ease of the math in the model, the leverage lever can be expressed as:

Total Assets
Total Equity

The greater this ratio then the more the proportion of debt is in the mix of assets.  If the assets financed by debt are earning a return greater than the interest rate, then the higher the ratio the greater the Rate of Return on Equity.

Figure 2 shows the same DuPont model with the ratio measures.

Note, the interest rate adjustment in the ROROA box is the adjustment needed to return the cost of interest before measuring the Rate of Return on Equity.  Recall that interest was taken out when calculating the OPMR.

The DuPont system as illustrated allows you to identify where profit performance is, or is not, coming from in one or more of three areas.  Once identified then the next step is to drill back into the numbers that make up the ratio of concern.

For example, if the OPMR is found to be lower than the manager would like it to be then look at the numerator of the OPMR (net income from operations + interest – unpaid labor & mgt) to determine what might be the problem, particularly expenses.  Compared to your more profitable peers what are your labor, vet, repair, and other input costs? 

If the performance problem appears to be coming from a low ATO then the manager might drill back into the business assets to see how well they are being used.  Are there dead assets in the business (ones not being used to create product for sales), does the business have excess machinery capacity, or are there assets that are under productive (poor weight gain, breeding cycles too long, sickness, death loss, etc.).

If the debt structure is low, that is debt is not leveraging equity as much as peer businesses, then the manager might drill back and question how debt is being used.  Could additional debt be used to improve facilities, machinery, etc. that ultimately pays for itself in higher production and sales or does debt that is not productive need to be paid off (or perhaps the assets sold). 

As with all financial analysis systems the model is only as good as the numbers that go into it, that is, garbage in then garbage out.  Another valuable piece of information to have to evaluate DuPont is benchmarks of profitable peers.  There are general ranges for each of the ratios, but each industry and your size within an industry makes a difference as to what is “good” for the ratios.  Finally whether you rent or own the assets you use in a business also makes a difference in the interpretation of the ratios. 

Appendix A provides a brief example of using the DuPont model.

It is often said that management is part science and part art.  The DuPont system has both elements.  The ratio calculations are science and just a manipulation of numbers.  The art is interpreting the ratios and drilling back into where the ratios indicate there could be challenges and thus information of where to spend your creative management time tomorrow morning after breakfast. 

Appendix A

Brief Example (Adapted from an example from Texas Tech University) http://www.aaec.ttu.edu/faculty/phijohns/AAEC%204316/Lecture/notes/DUPONT.htm

Table 1. DuPont Analysis for Two Farms

	Farmer A	Farmer B
1. Operating profit margin ratio (OPMR)	0.30	0.12
2. Asset turnover ratio (ATO)	0.20	0.36
3. ROROA (1*2)	0.060	0.043
4. Interest expense to avg. farm assets	0.05	0.03
5. Equity multiplier	2.00	1.50
6. ROROE (3-4) * 5	0.02	0.02

Farmer A and Farmer B each have a 2 % ROROE.  However, the levers of the DuPont system indicate that the sources of the weakness are different.  Farmer A has a stronger operating profit margin ratio but lower asset turnover compared to Farmer B. Furthermore, Farmer A has a higher leverage ratio (equity multiplier) than Farmer B.

The weak ratios for each farm may be decomposed into components to determine the potential sources of the weakness. To improve asset turnover Farmer A needs to increase production efficiency or price levels or reduce current or noncurrent assets. To improve profit margins, Farmer B needs to increase production efficiency or price levels more than costs or reduce costs more than revenue.

The DuPont analysis is an excellent method to determine the strengths and weaknesses of a farm. A low or declining ROROE is a signal that there may be a weakness. However, using the DuPont analysis can better determine the source of weakness. Asset management, expense control, production efficiency or marketing could be potential sources of weakness within the farm. Expressing the individual components rather than interpreting ROROE itself may identify these weaknesses more readily.

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KIAT INVESTASI : Meracik investasi yang aman

AKARTA. Naik-turunnya nilai investasi di sepanjang 2011 tentu saja memancing kegelisahan bagi banyak investor yang baru saja mulai terjun ke pasar modal dan juga logam mulia. Sehingga, satu pertanyaan yang pasti muncul setiap saya berkesempatan berbicara di seminar adalah, “Mbak, investasi apa yang paling aman untuk saya?”

Berbicara tentang risiko, seaman-amannya produk investasi, saya yakinkan, pasti ada risiko yang terkandung di dalamnya. Untuk semua pilihan investasi, Anda pasti akan berhadapan dengan tiga jenis risiko: kehilangan modal, kesulitan mengubah menjadi dana tunai, dan kehilangan daya beli akibat inflasi. Di antara ketiga risiko ini, saya yakin sebagian besar dari investor pemula pasti akan menempatkan risiko kehilangan modal sebagai risiko yang paling tinggi.

Anda tak mungkin bisa menghindari ketiga risiko tersebut. Tapi, Anda harus bisa menghindari risiko yang menjadi ancaman utama untuk keperluan penggunaan dana itu, yang akhirnya menjadi investasi “teraman” untuk situasi Anda.

Untuk saya, meracik investasi yang aman harus disesuaikan dengan tujuan finansial kita. Istilah high risk, high return harus kita ubah menjadi highest possible return with calculated risk. Kita wajib mencari produk investasi yang bisa menghasilkan potensi imbal hasil tertinggi untuk semua tujuan finansial kita. Bingung? Ini dia caranya.

Pertama, untuk tujuan finansial di bawah setahun. Dana Liburan untuk persiapan mudik lebaran 2012 atau uang pangkal masuk SD untuk tahun ajaran 2012-2013 adalah contoh-contoh tujuan finansial kategori pertama. Untuk ini, Anda tidak bisa menolerir risiko terjadinya kehilangan modal karena datangnya kebutuhan adalah pasti dalam jangka pendek. Oleh sebab itu, pilihan investasi Anda adalah tabungan, deposito, dan reksadana pasar uang.

Anda perlu tahu, meski tabungan dan deposito bisa dikatakan produk yang dapat menjamin modal investasi dan juga hasilnya, di Indonesia risiko kehilangan modal tetap ada jika bank tempat Anda menyimpan dana ditutup. Lembaga Penjaminan Simpanan hanya akan mengganti dana Anda jika simpanan Anda tercatat di bank dengan nilai tak lebih Rp 2 miliar per bank, tingkat suku bunganya sesuai dengan ketentuan LPS, dan Anda tidak punya catatan kredit macet.

Jadi, jika Anda masuk ke daftar hitam Bank Indonesia akibat kredit macet atau deposito Anda memberikan tingkat suku bunga yang lebih tinggi, jangan merasa aman dulu. Bisa jadi, tabungan dan deposito Anda ternyata masih masuk kategori risiko kehilangan modal!

Sesuai dengan tujuan

Kedua, untuk tujuan dana darurat. Dana darurat yang hanya digunakan untuk keperluan tak terduga, seperti biaya rumah sakit, biaya mengganti kerusakan kulkas, masuk ke kategori ini. Risiko tidak bisa mencairkan investasi menjadi dana tunai sangat menakutkan. Tabungan merupakan tempat terbaik untuk menyimpan dana darurat. Pilihan berikutnya adalah reksadana pasar uang karena dapat dicairkan kapan saja tanpa penalty.

Akan halnya deposito berjangka, mencairkan sebelum jangka waktu berarti Anda akan membayar penalti, kecuali Anda berinvestasi di deposito iB Syariah.

Ketiga, untuk tujuan finansial di atas setahun. Dana pendidikan kuliah untuk anak usia 7 tahun, dana pensiun untuk Anda yang berusia 30-an, atau dana membeli rumah kedua, termasuk kedalam kategori ini. Untuk Anda yang masih menggunakan tabungan atau deposito untuk keperluan ini, Anda harus bangun dari mimpi.

Jika tabungan Anda hanya memberikan hasil 2% setahun, sementara tingkat inflasi mencapai 6% setahun, maka dengan mendiamkan saja uang tersebut, Anda sebetulnya kehilangan 4% dari uang tadi. Jadi, meski modal investasi Anda mungkin aman, Anda kehilangan daya beli lebih dari setengahnya.

Contoh nyata yang banyak dihadapi oleh mereka yang saat ini punya anak remaja adalah kekurangan modal untuk dana masuk kuliah. Sepuluh tahun yang lalu, instrumen yang sangat popular untuk mempersiapkan dana pendidikan adalah asuransi pendidikan.

Meski produk ini pasti punya manfaat, sayangnya hasil investasi hanya sebesar bunga tabungan biasa. Faktanya, rata-rata kenaikan biaya pendidikan bisa mencapai 15% setahun di kota-kota besar. Alhasil, orang tua sudah bersusah payah berhemat, tetap saja uangnya tak cukup.

Mencari kombinasi yang seimbang bagi tujuan finansial Anda adalah seni dalam membuat portofolio investasi yang “aman” untuk Anda. Apapun situasi kehidupan Anda, saya menyarankan Anda menyimpan dana di produk yang risiko kehilangan modal dan risiko likuiditasnya rendah, minimal sejumlah 3 bulan pengeluaran rutin.

Semakin berisiko pekerjaan Anda, karena situasi bisnis yang kurang baik atau pilihan bekerja sebagai freelancer, maka perbesarlah jumlah dana yang ditempatkan di produk ini.

Seiring dengan pengalaman berinvestasi, Anda akan memahami kinerja berbagai aset investasi dan risiko yang dapat terjadi. Terpenting, Anda tetap merasa aman dan nyaman dalam berinvestasi untuk mencapai kehidupan yang sejahtera. Live a beautiful life! 

Sumber: http://www.kontan.co.id/

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Bank bakal buka lowongan kerja besar-besaran

JAKARTA. Ada sanak saudara Anda yang belum bekerja atau bosan bekerja di tempat yang lama? Cobalah meniti karier di bank. Industri perbankan kini sedang membuka lowongan kerja besar-besaran untuk mengejar target bisnis tahun ini. Bank kelas kakap seperti Bank Mandiri, Bank BNI, Bank Rakyat Indonesia (BRI) dan Bank Central Asia (BCA) membutuhkan tambahan personil khusus untuk menyalurkan kredit.

Bank Mandiri misalnya, akan merekrut sekitar 5.050 karyawan baru sepanjang 2012 ini. Dari jumlah tersebut, sebanyak 83% akan ditempatkan di kegiatan inti dan sisanya pendukung usaha. "Sebagian besar tambahan pekerja untuk mengejar target kredit," kata Ogi Prastomiyono, Managing Director Compliance and Human Capital Bank Mandiri, Selasa, (10/1). Suplai tenaga baru di divisi commercial and business banking ini mengerek biaya pegawai sebesar 21%.

Bank Mandiri bukan satu-satunya. Survei Deutsche Bank for Indonesia yang dipublikasikan Senin (9/1) menyebutkan BCA, BRI dan BNI juga berencana merekrut karyawan dalam jumlah besar. Mayoritas untuk posisi marketing dan analis kredit.

Junaidi Hisom, Pemimpin Divisi Sumber Daya Manusia BNI mengatakan, penambahan tenaga kerja tergantung ekspansi bisnis dan jumlah pegawai yang pensiun atau habis masa kontraknya.

Bank BUMN ini akan menambah 2.000 orang tenaga kerja, terdiri dari 1.000 tenaga lulusan sarjana untuk petugas program pengembangan atau officer development program dan 1.000 lainnya di level asisten atau sales untuk mengisi unit baru dari masing-masing cabang di berbagai daerah.

Junaidi menjelaskan, BNI akan mendidik tenaga kerja lulusan baru selama satu tahun, sedangkan level asisten akan mendapatkan pendidikan kerja selama dua tahun, sebelum diangkat menjadi pengawai tetap.

Muhammad Ali, Sekretaris Perusahaan BRI mengatakan, tahun ini BRI akan menambah 9.000 karyawan untuk marketing. Kebutuhan karyawan baru seiring penambahan jumlah unit mikro BRI seperti Teras, penambahan cabang baru dan unit kerja.

Menurut Taimur Baig, Direktur dan Kepala Ekonom Deutsche Bank Indonesia, kenaikan jumlah tenaga kerja tersebut lantaran bank mampu meningkatkan rasio produktivitas, seperti pertumbuhan pinjaman, peningkatan penambahan modal bagi anak usaha. "Secara keseluruhan, karyawan bank besar seperti Mandiri, BNI, BCA dan BRI adalah tenaga kerja dengan bayaran tertinggi," ucapnya

sumber: http://www.kontan.co.id/

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Collateralized Debt Obligation: Rekayasa Finansial Berbuntut Krisis

Selasa, 18 September 2007,  Federal Reserve Amerika Serikat (AS) memangkas suku bunga antarbank 50 basis poin dari 5,25% menjadi 4,75%. Indeks Dow Jones meroket tajam 2,51%. Begitu juga dengan pasar saham Asia. Indeks Nikkei 225 Jepang naik 3,17%.  Indeks Hang Seng naik 3,78%. Hal yang sama juga terjadi di Korea Selatan, Filipina sampai dengan India.

Terlihat jelas, The Fed sengaja memberikan sentimen positif kepada para investor dengan menciptakan persepsi bahwa The Fed telah melakukan aksi positif untuk memperbaiki kondisi pasar kredit perumahan di AS yang memburuk, belakangan. Sepertinya, kegalauan para investor Asia terhadap kondisi perekonomian AS mulai mereda.

Padahal, sebelumnya, pasar finansial dunia merosot sangat tajam. Kenaikan indeks bursa saham yang sempat dicapai selama 2007 hampir terhapus dalam tempo singkat. Di dalam negeri, pada 26 Juli 2007, indeks harga saham gabungan (IHSG) sempat hancur lebur, minus sekitar 20% lebih.

Jika menoleh ke belakang, disebut-sebut bahwa koreksi yang tajam dari indeks pasar saham dunia, beberapa waktu lalu tersebut, diakibatkan krisis subprime mortgage AS.  Mortgage singkatnya adalah pinjaman untuk membeli properti yang dijamin properti itu sendiri.

Di AS, prime mortgage adalah kredit yang diberikan kepada para debitor yang memiliki sejarah kredit yang baik dan dapat menunjukan kapasitas untuk membayar kembali utangnya. Sedangkan, subprime mortgage diberikan kepada peminjam yang memiliki sejarah kredit yang buruk atau kapasitas membayar pinjaman yang rendah. Artinya, warga AS yang tidak bisa mendapatkan pijaman untuk membeli rumah secara sewajarnya tetap bisa meminjam melalui pinjaman subprime mortgage tersebut.

Jelas bahwa risiko gagal bayar dari para debitor subprime mortgage lebih besar daripada para debitor prime mortgage. Tapi, mengapa para kreditor mau memberikan kredit yang berisiko tinggi? Gampang saja karena kreditor akan menerima bunga tinggi, 2% sampai dengan 5% dari prime mortgage.

Kemudian, para kreditor berharap bahwa nilai jual properti yang dijaminkan akan terus naik, sehingga berpotensi memberikan imbal yang lebih menggiurkan. Tapi, kejadian yang nyata justru sebaliknya. Bau krisis mulai menyengat setelah kemudian ternyata harga properti jatuh. Mimpi mendapat keuntungan besar pun hanya tinggal harapan.

Lantas, bagaimana krisis yang terjadinya di AS bisa berdampak secara global? Pada awalnya, para kreditor (bank investasi) merekayasa finansial dengan memaket kembali tagihan kepada para debitor menjadi instrumen finansial yang dikenal dengan mortgage backed securities (MBS).

Singkatnya, MBS merupakan aset yang memiliki pendapatan, yaitu ketika debitor mortgage membayar bunga mortgage dan ketika mereka melunasi utangnya. Tentu tidaklah mudah menjual MBS ini karena aset yang mendasarinya berkategori jelek (subprime). Tapi, dengan melakukan rekayasa keuangan sedikit saja, bank investasi memecah-mecah MBS menjadi beberapa jenis (trances), sehingga terciptalah instrumen yang disebut collateralized debt obligation (CDO). Nah, CDO inilah yang kemudian disebut menjadi biang keladi, sehingga krisis pinjaman rumah di AS berdampak secara global. Seperti apa sih CDO itu?

CDO pada dasarnya adalah satu cara penciptaaan sekuritas dengan karakter risiko yang berbeda-beda dari suatu portofolio utang. Pada CDO, risiko kredit dari pihak yang menerbitkan ditransfer kepada para investor. Pada umumnya, penerbit CDO disebut dengan SPV (special purpose vehicle). Penerbit CDO biasanya melakukan transfer eskposur dari lebih 200 sekuritas dalam portofolionya. Kemudian, SPV tersebut  memberikan imbal hasil paling tidak pada tiga karakter investor (trance) yang berbeda: senior tranches, mezzanine tranches, dan junior trances.

Junior tranches akan menanggung risiko kredit yang paling besar. Maksudnya, kerugian pertama kali akan ditanggung invetor yang membeli CDO pada junior tranches ini. Tapi, tentunya, imbal hasil (return) paling tinggi juga akan diterima investor pada CDO junior tranches tersebut. CDO mezzanine tranches baru akan mengalami kerugian setelah besarnya kerugian yang harus ditanggung junior tranches terlampaui. Senior tranches baru akan menanggung kerugian setelah mezzanine tranches.

Karena memiliki risiko paling tinggi, CDO junior tranches sering kali sulit dijual kepada investor. Sehingga, junior tranches biasanya tetap dipegang SPV. Pasar terbesar CDO adalah senior tranches (peringkat AA atau AAA), disusul dengan mezzanine tranches (peringkat B sampai dengan AA).

Saat ini diperkirakan terdapat US$100 miliar aset CDO yang dijamin subprime mortgages dari perkiraan total CDO lebih dari US$350 miliar. Terlihat jelas, walau potensi kerugian pada CDO dibuat bertingkat, jika terjadi krisis—di mana para debitor subprime mortgage mengalami gagal bayar secara besar-besaran—CDO tranches yang mana pun akan memiliki risiko yang sama.

Tidak sampai di sini, instrumen CDO pun terus berkembang. Jika yang kita bahas sebelumnya adalah disebut cash CDO, yaitu SPV melakukan investasi secara langsung pada portofolio surat utang, yang akan kita bahas ini adalah synthetic CDO. Pada synthetic CDO, SPV tidak melakukan investasi pada surat utang, tapi cukup melakukan penjualan kredit derivatif berupa credit default swap (CDS).

Singkatnya, CDS adalah kontrak antardua pihak, yaitu pihak yang membeli proteksi (protection buyer) membayar suatu biaya (premium) kepada pihak lain yang disebut sebagai penjual proteksi (protection seller). Jka terjadi suatu credit event, protection buyer akan menerima sejumlah pembayaran dari protection seller. Pembayaran premi yang dibayarkan protection buyer kepada protection seller bisa sekaligus (lumsum) atau secara periodik. Credit event di sini bisa saja kejadian default-nya suatu debitor dari protection buyer atau turunnya peringkat surat utang (obligasi) yang dipegangnya.

Jadi, dengan menjual CDS, SPV yang menerbitkan CDO akan menerima pembayaran premi secara periodik dari pihak yang membeli proteksi dan menerima kas dari para investor yang membeli CDO. Kas ini selanjutnya diinvestasikan pada surat utang (obligasi) yang bebas risiko default.

Nah, instrumen-instrumen CDO berbasis subprime mortgage di AS inilah yang kemudian juga dibeli bank-bank, perusahaan asuransi, hedge funds, reksa dana (mutual funds), dan lembaga keuangan lain. Tidak hanya di AS, tapi juga telah menyebar secara global. Buntutnya, risiko subprime mortgage tersebar ke seantero dunia.

Bercermin pada masalah di atas, investasi pada subprime mortgage merupakan akar permasalahannya. Mungkin, bisa disamakan dengan meniup balon secara terus-menerus. Tinggal tunggu waktu akhirnya akan meletus juga. Sepertinya, perilaku terlalu yakin sempat menghinggapi para kreditor subprime mortgage dan para investor CDO. Jika perilaku overconfident ini menghinggapi investor, faktanya sering kali membuatnya menjadi lebih berani menanggung risiko. Tapi, tetap saja tidak terbantahkan, CDO, yang lahir melalui proses rekayasa finansial tersebut, memang berperan dalam krisis pasar finansial global.

Namun, sudahlah. Yang lebih penting, setelah menurunkan suku bunga, tentu, The Fed tidak akan serta-merta memulihkan kondisi perekonomian AS. Perbaikan sektor properti AS masih akan memakan waktu lama, sedangkan ancaman inflasi terus membayangi AS. Implikasinya, peluang The Fed untuk merevisi suku bunga terus terbuka dalam beberapa waktu ke depan. Kita di sini perlu selalu waspada. (*)

Sumber:http://www.infobanknews.com/

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8 Deadly Mistakes of Small Businesses

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If you are going to survive and be a long-term success in business, then
you need to be aware of the most common mistakes and pitfalls that can ruin your best-laid plans. Here are the ones to really watch out for:

1. Inability to reach desired sales goals.

If you are not making the kind of sales that you need, your losses multiply as you find it difficult to meet your fixed costs requirements, such as payment for your inventory and overhead.

What to do:  While you may not have sold anything before, now is the time to get your chin up and learn those selling techniques. You simply have no choice: don t sell and you may be forced to
close the business.

One strategy you can also use when sales (and profits) are low is to cut prices. This could attract customers, helps cover your costs, and buys time until your business rebounds. A price cut can also boost sales quickly, especially when there is no money for advertising or other promotions.

However, the downside of this strategy is that you may find it difficult to increase your prices back to
its original level. Consumers may even peg you into the  cheap  category, thus putting your hard- earned image at risk.

2. Wallet is not big enough.

You gather all the resources you can to start a business  you withdrew all your life savings, borrowed money from your parents, even  maxed-out  your credit cards. When you open for business, alas, you find that customers and sales can be pretty elusive. You wait, and wait, and wait, but cash is running out. Without money coming in, you decide to cut your losses and close down the business.

What to do: The first step to addressing the problem is to review how you performed against your business plan. Did you spend beyond your planned expenditures? More often than not, your
problem lies in a genuine misguided and unrealistic expectation of finance.

Try to explore other avenues of financing your business, even opening yourself to accept equity financing where you will be required to sell an ownership interest in the business in exchange for capital. Your choices may be to build the business yourself and push it to success, then later sell
 
your interests for a fair profit; or be repeatedly frustrated in attempts at financing a business that cannot achieve its potential because of insufficient capital.

3. Product has no sizzle.

Your success depends on whether you provide products or services with value to your customers. Many small business entrepreneurs fail to effectively communicate to their customers the benefits of their products or services. This is particularly true of many home-based Internet entrepreneurs, who have been misled to believe the myth that  if you build it, they will come.


What to do: The acceptance of your products will depend on how well you are able to represent
your business in the minds of your customers. If you know that you offer good quality products or services with value, the next step should be to get that information across your target market. Generate customer interest in the product through advertising and promotions.

4. Marketing and advertising fails to elicit response

You must develop effective strategies to market your business. But is your marketing plan working,
or are they just a waste of time and resources?

Many business owners, in an attempt to save on costs, develop their own marketing campaigns only to fail in their intended purpose of bringing in more business or achieving "top-of-mind- awareness" in the mind of the customer. Their campaigns become ineffective, in the sense that it suffered from unbelievability, an irrelevant message, market saturation, and/or improper niche marketing. They spend time and resources on wrong advertising medium.

What to do: To achieve your marketing and advertising goals, you need to have an effective message, market position, and adequate funding. An advertising message that is "believable and
relevant" is the key to promotional success. When you have the right thing to say in your promotion, you will drive sales. And when the right message is also unique, it becomes even more effective.

5. Failure to adapt to changing market conditions

Changing market conditions may include downturn or upswings in the economy, heightened competition, or even common business risks such as Web site business interruption or calamities. It may mean changing neighborhood profiles, where once thriving areas full of walk-in customers are now deserted. When these changes strike, you may find your business ill-prepared to cope and survive.

What to do: Stay abreast of the rapidly changing business environment by reviewing your company s business strategy. If you determine that your current strategy will not work, overhaul
your business focus, if necessary. It is important that you study your customers thoroughly so you can track customer preferences and buying trends. This will help release your company from the economic ups and downs.

6. Poor management

Poor management ranks high among the reasons for the failure of many small businesses. It may cover anything from the inability to manage people, security, financial aspects, marketing or customer relation aspects of a business.
 
One of the most neglected and poorly managed aspects of small business operation is security and loss prevention, particularly for businesses with employees. According to U.S. Department of Commerce statistics, employee dishonesty alone causes 30 percent of all business failures. The
lack of security could affect employee morale, productivity, as well as customer goodwill. Irreparable damage occurs when a company s employees victimize customers or other members of the public.

Poor credit management is another common source of the downfall of many businesses. The failure
to handle credit well is often the precursor of many cash flow problems.

What to do: Starting a business is a different ballgame from managing employees. Some people are better off starting businesses, rather than dealing and managing other people. If you think you
do not have the talent to manage people, hire someone who can oversee employee management and focus on the areas that you do best.

You also need to consider implementing measures to safeguard your business assets, such as inventory, equipment, supplies, cash, and yes, your people. Physical protection of employees and customers is crucial, but often overlooked.

To handle credit management problems, you can review your customer invoicing policies, possibly shifting to a strategy where each invoice carry a 'pay by' date as well as the pre-determined
payment terms instead of invoicing in a set pattern. Also watch out for your creeping overheads cancel forgotten subscriptions, hunt down direct debits, change how you buy things, etc.

7. Lack of know-how

Many small businesses perish because the entrepreneur simply lacks the know-how in a particular aspect of business. This is particularly true for sole proprietors who must learn how to wear many hats. You may be good in creating your crafts, but you may need help in setting up your accounting
system or distributing your products. Or you may have an idea where to find additional financing, but lacks the skills to network in the mainstream capital sources.

What to do: Get a board of advisors, or consult a mentor. You may not need a full complement of a formal board of directors, but your business will benefit from the advice of 2-3 people who can
provide you with the knowledge in areas that you need help. These people can be your family or friends, as long as they can give you honest assessments of what they think you are doing and where the business is heading.

Or you can hire on a retainer basis some professionals in your area, such as a small business
lawyer, an accountant, or a business consultant. You can also seek the help of business counselors such as the Service Corps of Retired Executives (SCORE), who can provide you with experienced counselors in your field.

8. Wrong location

Location plays a key role in the success of many small businesses; particularly those engaged in retail and hospitality businesses. These businesses need a location that is appropriate, visible and attracts significant traffic. Restaurants and retail stores need a location where there is sufficient parking, a good flow of walk-in and drive-by traffic, and little competition.

For home-based entrepreneurs, location depends on the zoning restrictions of the area. You may insist on operating the business from the comforts of your home, but zoning laws (and neighbors) may disagree with you and prevent you from operating the business.
 
What to do: Before deciding on the location of your business, study the area carefully. Review the population information and see if it matches your market. Is the population increasing, declining or stable? Check the progressiveness of the business community, gauging how open the community
is open to change and whether retailers are open on Sundays. You also need to know the business trends in the area for the past year, and the number of new businesses that opened as well as
those that have closed recently.

If you are operating a home business, be sure to check with your zoning authorities.

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All Margin Term And Definitions

MARGIN

 Dictionary of Accounting Terms

1. see gross margin ; profit margin .
2. partial payment made by an investor to a broker for securities purchased, with the remainder on credit. The broker retains the securities as collateral and charges the investor interest on the money owed. The Federal Reserve Board determines margin requirements. The margin requirement for stocks is higher than that for convertible bonds because of greater risk. Assume that with a margin requirement of 50% (present requirement), 100 shares of XYZ stock are bought at $100 per share. The actual amount invested is $5000, with a margin of $5000 on credit.
3. in commodities trading, deposits required by commodities exchanges.
4. in accounting, a reference to revenue or profitability. Examples are gross profit margin (gross profit/sales) and profit margin (net income/sales).

Dictionary of Finance and Investment Terms

 In general: amount a customer deposits with a broker when borrowing from the broker to buy securities. Under Federal Reserve Board regulation, the initial margin required since 1945 has ranged from 50 to 100 percent of the security's purchase price. In the mid-1990s the minimum was 50% of the purchase or short sale price, in cash or eligible securities, with a minimum of $2,000. Thereafter, minimum maintenance requirements are imposed by the National Association of Securities Dealers (NASD) and the New York Stock Exchange, and by the individual brokerage firm, whose requirement is typically higher.
Banking: difference between the current market value of collateral backing a loan and the face value of the loan. For instance, if a $100,000 loan is backed by $50,000 in collateral, the margin is $50,000.
Corporate finance: difference between the price received by a company for its products and services and the cost of producing them. Also known as gross profit margin.
Futures trading: good-faith deposit an investor must put up when buying or selling a contract. If the futures price moves adversely, the investor must put up more money to meet margin requirements.

 Dictionary of Banking Terms

 Banking

1. Net Interest Margin , or the percentage difference between a bank's yield on earning assets (mostly loans) and interest paid to depositors.
2. proportion of the asset pledged as security, for example, inventory or accounts receivable, that a bank will lend against. The difference between the market value and loan value is also called a haircut . If the collateral declines in value, additional margin will be required.
3. premium a mortgage lender adds to an index rate in determining the loan interest rate in an adjustable-rate mortgage . This premium is typically two to three percentage points.

 Futures:money or securities put up as a good faith deposit assuring that a future contract will be fulfilled. Also known as a security deposit, as in the initial margin and maintenance margin required when a futures position is open.
Securities:money deposited with a broker that serves as partial payment when purchasing securities. The Federal Reserve Board's Regulation T sets a maintenance margin , currently 50%, in purchases or short sales of securities. Margins may be put up in cash or eligible securities. Individual broker-dealers may impose higher margins in trades of over-the-counter securities





Dictionary of Insurance Terms
fluctuation in claims arising from adverse selection*

*process in life insurance by which an applicant who is uninsurable, or is a greater than average risk, seeks to obtain a policy from a company at a standard premium rate. Life insurance companies carefully screen applicants for this reason, since their premiums are based on policyholders in average good health and in non-hazardous occupations.

 Dictionary of Marketing Terms
 Marketing:see gross profit ; markup .
Printing:space on a page between the copy and the edge of the page. The four margins are called, clockwise from the top, head margin, front margin, foot margin, and inside or back margin. bleeds are produced by printing into the margin up to or slightly beyond the point at which the paper sheet will be trimmed to page size. The gutter is the area between the margins of two pages on an untrimmed sheet.

 Dictionary of Business Terms

n general: amount a customer deposits with a broker when borrowing from the broker to buy securities.
Accounting: difference between gross and net amounts of income. See also margin of profit
.Banking: difference between the current market value of collateral backing a loan and the face value of the loan.
Communication: white space along borders of a printed page. See also footer ; header .
Corporate finance: difference between the price received by a company for its products and services and the cost of producing them. Also known as gross profit margin.
Economics: usefulness or cost of the next item.
Futures: good-faith deposit an investor must put up when buying or selling a contract. If the futures price moves adversely, the investor must put up more money to meet margin requirements.

Dictionary of Real Estate Terms

a constant amount added to the value of the index for the purpose of adjusting the interest rate on an Adjustable-Rate Mortgage .
Example: An adjustable rate mortgage is indexed to the 1 year Treasury yield and has a margin of 3 percentage points. If the index is currently 6%, the fully indexed rate on the loan is 9% (6% index plus 3% margin).

 Other Term and Definitions

profit margin

ratio of income to sales. (1) net profit margin equals net income divided by net sales. It indicates the entity's ability to generate earnings at a particular sales level. By examining a company's profit margin relative to previous years and to industry norms, one can evaluate the company's operating efficiency and pricing strategy as well as its competitive status with other companies in the industry. (2) gross profit margin equals gross profit divided by net sales. A high profit margin is desirable since it indicates the company is earning a good return over the cost of its merchandise sold.

margin of profit

relationship of gross profits to net sales. Returns and allowances are subtracted from gross sales to arrive at net sales. Cost of goods sold (sometimes including depreciation) is subtracted from net sales to arrive at gross profit. Gross profit is divided by net sales to get the profit margin, which is sometimes called the gross margin. The result is a ratio, and the term is also written as margin of profit ratio.
The term profit margin is less frequently used to mean the net margin, obtained by deducting operating expenses in addition to cost of goods sold and dividing the result by net sales. Operating expenses are usually shown on profit and loss statements as "selling, general and administrative (SG&A) expenses."
Both gross and net profit margins, when compared with prior periods and with industry statistics, can be revealing in terms of a firm's operating efficiency and pricing policies and its ability to compete successfully with other companies in its field.

average profit margin

1. method of calculating the profit margin per item sold by applying an equal proportion of the total expenses of the seller against each item sold. It can be used to determine the benefit to be gained from advertising. For example, assume a $100 advertisement will generate 100 sales. Each items sells for $5 and costs $3 to produce and deliver, leaving a profit margin of $2. Since advertising will cost $1 per item sold, the average profit margin of $1 indicates that the item will be profitable after advertising expense.
2. gross profit margin of a business enterprise averaged over a period of time. The gross profit margin is the annual net sales or revenues less the cost of goods sold.

 net profit margin

 net income as a percentage of net sales . A measure of operating efficiency and pricing strategy, the ratio is usually computed using net profit before extraordinary items and taxes-that is, net sales less cost of goods sold and Selling, General, and Administrative (SG&A) Expenses .

contribution profit margin

in cost accounting, excess of sales price over variable costs or expenses . This difference provides an amount to offset fixed costs and thereby contributes to gross profit .

gross margin ratio

percentage of each sales dollar remaining after a firm has paid for its goods; also called gross profit margin. It is calculated by dividing gross income (profits) by net sales. For example, assume that net sales are $80,000 and gross profit is $30,000. The gross margin ratio is 0.38 ($30,000/$80,000).

net profit margin

net income as a percentage of net sales. A measure of operating efficiency and pricing strategy, the ratio is usually computed using net profit before extraordinary items and taxes-that is, net sales less cost of goods sold and Selling, General, and Administrative (SG&A) Expenses.

full cost profit margin

difference between total revenue and total costs traceable to a work cell or product.
 

order margin

total cost of goods sold-including product, selling, and delivery costs but not including promotion costs-subtracted from the total sales revenue generated, and divided by the number of units sold. The promotion budget must not exceed the order margin and, in addition, must be small enough to leave a profit margin. For example, assume 100 units are sold by a retailer at a price of $20, yielding $2000 in revenue. The cost of the goods was $300, and all costs associated with warehousing, displaying, and selling the goods in the store totaled $1200. The order margin, therefore, is $15 per unit sold (1200 + 300 ÷ 100), leaving $500 for promotion expense and profit.
Direct marketers generally have a lower order margin than retailers, because they do not have the expenses associated with managing a retail outlet (leased space, salesclerks, electricity, furniture and fixtures, and so forth) and can sell goods at a lower price.

gross profit

difference between revenue (sales) and the cost of goods sold. For example, XYZ Company sold through a newspaper advertisement 120 belts that cost XYZ $10 each. XYZ sold each belt for $18. The gross profit is calculated as follows:

(sales)	120 × $18 =	$2,160
(cost of sales)	120 × $10 =	$1,200
Gross profit		$ 960

The gross profit as a percentage of revenue is termed the gross profit margin. Gross profit is different from net profit , which is gross profit net of other income or expenses, interest expense, and taxes.

profit variance

difference between actual profit and budgeted profit. Profit, whether it is gross profit in absorption costing or Contribution Margin in direct cost , is affected by three basic items: sales price, sales volume, and costs. In a multi-product firm, if all products are not equally profitable, profit is also affected by the mix of products sold. If actual profit is greater than budgeted profit, the total profit variance is favorable and credited; otherwise, it is unfavorable and debited.
See also sales price variance  , Contribution Margin (CM) Variance

  * sales price variance

difference between actual selling price per unit and the budgeted selling price per unit, multiplied by the actual number of units sold.

Sales Price Variance =

(Actual Price-Budgeted Price)

×Actual Sales

If the actual price is greater than the budgeted price, a variance is favorable; otherwise, it is unfavorable.

*Contribution Margin (CM) Variance

difference between actual contribution margin per unit and the budgeted contribution margin per unit, multiplied by the actual number of units sold. If the actual CM is greater than the budgeted CM per unit, a variance is favorable; otherwise, it is unfavorable.
CM Variance = (Actual CM Per Unit - Budgeted CM Per Unit) × Actual Sales
 

unit contribution margin

excess of the unit selling price over the unit variable cost. For example, if the sales price is $30 and the unit variable cost is $18, then the unit Contribution Margin (CM) is $12. This means that each unit sold contributes $12 toward the fixedcost or profit.

contribution margin method

variation of the equation method . It is used in Cost-Volume-Profit (CVP) Analysis or break-even analysis . The approach centers on the idea that each unit sold provides a certain amount of Contribution Margin (CM) that goes toward the covering of fixed costs. Listed below are some formulas:

1. Break-even Point in units= Fixed Costs/Unit Contribution Margin
2. Break-even Point in dollars= Fixed Costs/Contribution Margin Ratio
3. Target income volume in units:
   (Fixed Costs + Target Income)/Contribution Margin
4. Target income volumein dollars:
   (Fixed Costs + Target Income)/Contribution Margin Ratio

 operating performance ratio

measure of profitability to sales to determine the return earned on the revenue generated. Some operating performance ratios are the profit margin (net income to sales), gross margin ratio (gross margin to sales), and operating profit margin (operating income to sales). The higher these ratios, the better the profitability earned on the company's sales.

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10 Effective Money-Saving Strategies

Saving money is an ongoing challenge for most people. Paychecks, dividends, and an occasional bonus go only so far. Therefore, it's worthwhile to develop some money-saving strategies, such as the 10 listed below.

1. Track spending and evaluate results. By tracking your spending habits, you'll get an idea of where you spend your money. By evaluating the results, you can see if you're using money for things that aren't really necessary. For example, do your monthly membership fees go to a gym you never have time to visit? Do you buy coffee every morning when it’s available in your office for free? Look at all the places where you can save money; even small outlays can add up.

2. Pay yourself first. This idea is certainly not new, but it's a strategy that starts a consistent savings program. Unless your entire paycheck is earmarked for monthly bills and necessities, you should be able to put money into savings every month. If you get a raise, add that money to what you're putting aside.

3. Company savings plans. Many companies offer 401(k) plans. Take advantage of them. If one isn't available, open an IRA. Use direct deposit for these retirement savings accounts so you're not tempted to spend the money elsewhere.

4. Forget the plastic. Limit yourself to one or two credit cards with the best rates, and use them for only major purchases or emergencies. Also, pay off your credit card balances monthly.

5. Learn how to shop. The Internet provides a very easy way to compare prices. Look for lower prices, discounts, sales, and coupons. Check out price comparison Web sites, such as Shopping.com, and BizRate.com. Avoid paying surcharges, late fees, and other fees for convenience. Shop from lists rather than browsing the aisles, and establish a firm "no impulse buy" policy.

6. Look to save on your home. Look for lower mortgage rates and refinance. Also, while paying off your home mortgage each month, round up. You can pay off the loan a little faster, and save a surprisingly high amount of the interest over time.

7. Save on utilities. Review the offers from competing phone and electric companies. Look for energy-saving appliances, and save some money by opening windows when it’s warm, and using a second blanket when it’s cold.

8. Be car smart. Find a mechanic you can trust before paying big bucks for unnecessary repairs. Don’t buy a second or third car that will hardly be used or will sit at the train station. Look for lower gas prices in your neighborhood, and keep your engine tuned, trunk uncluttered, and tires properly inflated to save on gas.

9. Get everyone onboard. Discuss ways of saving money and establishing good spending habits with everyone in your household.

10. Read the fine print. Review your bills carefully, including your credit card statements. Errors in billing cost customers millions of dollars each year. Also, in this new age of warranties included with every major purchase, read the fine print carefully, and buy only what will be valuable for those products most likely to need service.

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FINANCIAL STATEMENTS: WHO USES THEM AND WHY

Here is a br ief  list of  who uses financial statements and why. This list gives only a few examples and is by no means complete.

1. Ex isting equity investors and lenders, to monitor their investments and to evaluate the performance of management  
2. Prospective  equity  investors  and  lenders,  to  decide  whether or  not  to invest. 
3. Investment   analysts,money managers, and stockbrokers, to make buy/sell / hold recommendations to their clients
4. Rating agencies (such as Moody’s, Standard & Poor ’s, and Dun & Brad- street), to assign credit rating. 
5. Major  customers  and  suppliers,  to  evaluate  the  financial  strength  and staying power of the company as a dependable resource for their business. 
6. Labor unions, to gauge how much of  a pay increase a company is able to af ford in upcoming labor negotiations. 
7. Boards of directors, to rev iew the performance of management
8. Management, to assess its own performance.
9. Corporate raiders, to seek hidden value in companies with underpr iced stock. 
10. Competitors, to benchmark their own financial results.
11. Potential  competitors,  to  assess  how  profitable  it  may be to enter  an industr y.
12. Government agencies responsible for tax ing, regulating, or investigating the company.
13. Politicians, lobbyists, issue groups, consumer advocates, env ironmental- ists, think tanks, foundations, media reporters, and others who are sup- porting or opposing  any particular  public  issue  the  company’s  actions af fect.
14. Actual or potential joint venture partners, franchisors or franchisees, and other business interests who need to know about the company and its fi- nancial situation.

This brief list shows how many people and institutions use financial statements for a large var iety of business purposes and suggests how essential the ability to understand and analyze financial statements is to success in the business world.

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