Most business owners and financial managers realize they can either purchase fixed assets out of equity, or finance those same assets on a long term lease.

Business owners need to focus heavily on the use of the asset. Any company that acquires assets has either a long term view of the asset or a short term view. Lease financing is an excellent method of financing long term assets.

From the company perspective a long term lease on the asset - typically 3-5 years, and sometimes longer, is simply a method of purchasing the equipment via a ‘ loan ‘. The company simply decides on which asset or assets they wish to acquire, and then negotiates a price with the vendor or manufacturer. Typically the company is either dealing with the vendor/mfr. or the captive finance firm related to that manufacturer.

Business owners are barraged with claims that ‘ leasing provides 100% financing ‘ or that it ‘ conserves capital ‘. More sophisticated business owners and financial executives know that long term leasing is in fact a solid mechanism for tax avoidance. Some people maintain that if corporate taxes disappeared long term leasing would disappear!

When a firm arranges leasing it of course uses the equipment, and makes fixed payments on that equipment. Business owners focus more often than not on ‘ using equipment ‘, not owning equipment. The user can though structure leases allowing them to purchase the equipment at end of term.

If a customer does not wish to acquire assets over a long length of time, and if those assets have a shorter useful economic life than a firm should consider an ‘ operating lease ‘. The company has the right to cancel the lease at the end of term, return the asset, etc. In long term asset financing the transaction cannot be cancelled.

If a firm utilized a purchase strategy for long term assets then the funds for those purchases come from equity shareholders. The company uses the asset, and it owns the asset. Many customers have a philosophy of ‘ pride of ownership ‘ and have long term histories of acquiring assets under a purchase strategy. If the company is properly funded this is of course an entirely viable option.

We would point out further that if the financial markets were ‘ perfect ‘ ( they are not!) the advantages of leasing would diminish. In that case the company would not have to consider legal costs, brokerage costs, and other miscellaneous fees. Leasing matters because there are no perfect markets - advantages gained by the lessee are at the expense of the lessor, and each company has a unique credit and risk profile.

In summary, each company has a unique financial structure and acquisition philosophy around financing and asset acquisition. Owners and managers must consider the optimal financing strategy for long term assets that best suits overall corporate needs.

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Today i read and financial report, although they has a lot of omzet improvement, but when we see the net profit there wasn’t significant improvement. So i think we should KNOW WHAT IT TAKES TO IMPROVE NET PROFIT

In all your plans and actions for the business, always remember the fundamental profit formula: PROFIT = REVENUE EXPENSES. In the context of this formula, your net profit can improve through any of the following permutations:

1. Increase revenues, and increase expenses (at rates lower than revenue increase)

2. Increase revenues, and maintain expenses

3. Increase revenues, and decrease expenses

4. Maintain revenues, and decrease expenses

5. Decrease revenues, and decrease expenses (at rates higher than revenue decrease)

As a good operating practice, you should manage to perform within situations I.1 to I.3. Increasing revenue, which demands continued productivity, is the central source of power every business owner must possess to bring the business to its next-level.

In today’s uncertain and difficult times, avoid being in situations I.4 and 1.5. It is a lot harder to manage costs now without crippling your competitive capacity. And if you have no revenue buffer to draw from, you will likely encounter business-building difficulties if you cut costs or hold back your business spending in untimely manner.

Sometime i asking myself? How much money do i need for my life? Because i want to know when we could say that we already have enough money and starting to think another.

“If I only had $1 million I could be retired for the rest of my life.” How many times have we heard that said…or even said it ourselves?

The truth is $1 million dollars may not be enough. First we need to find out how much we need annually to live on. Conventional estimates usually say anywhere from 60%-80% of your take home pay based on your last year of full-time employment. You may be able to get by on that, however, most people don’t want to just get by when they retire. They want to be able to travel and do things. You should have your house paid for when you retire so you should not have a house payment, however, you will have an increase in your health insurance costs. I figure those should balance out, so in my humble opinion you need to have at least 100% of your take home pay and maybe even more.

Now let’s look at the $1 million dollar statement. If you have $1 million dollars invested in some good Growth Mutual Funds, you should be able to average a 10%-12% rate of return. We will be conservative and say 10%. Inflation has averaged a little over 4% since 1900. We once again will be conservative and use 5% for inflation. So we have $1 million dollars in a Mutual Fund that is earning 10%. We want that fund to grow to keep up with inflation. It won’t do us any good to withdraw $50,000 every year for 30 years. That may be fine the first year but by the 30th year that $50,000 may be the equivalent of $10,000 when you first start withdrawing it.

The $1 million dollars earning at a 10% rate will make $100,000 the first year. If we continue to take 5% out each year and leave 5% in the Mutual Funds then we should be able to cover for inflation. That means the first year we ill take out $50,000. The new balance in the Mutual Funds will be $1,050,000. That $1,050,000 earning a 10% rate will make $105,000 in the second year. If you take 5% that means your second year income will be $52,500. The balance on the Mutual Fund will then be $1,102,500. As you can see, you will be paying yourself a higher amount each year and also your Mutual Fund will be growing to help compensate for inflation.

Don’t forget that you will have to pay taxes on the $50,000 so a conservative figure would be to use 80% of the amount that you withdraw from you Mutual Fund. That would mean that you would net $40,000 the first year.

Now the question is “how much do you need annually to retire?” If you are currently taking home about $40,000 per year, then you will need $1 million dollars. If your take home pay is only $30,000 then you could manage with only $750,000 in your Mutual Fund. I get that figure by taking $750,000 times 5% to get $37,500. I then take $37,500 times 80% and get a net of $30,000.

If you have a Roth IRA or Roth 401k, what you withdraw from those are not taxable. You need to keep that in mind as you calculate your retirement. Also remember that I used conservative figures and did not include Social Security. The way the government runs things, I am not going to count on Social Security, at least not to cover my necessities. I may count on Social Security for stuff like travel and entertainment.

So it’s my personal calculation to calculate my retirement plan. Actually based on this theory you also could calculate your retirement need.

for me, it’s like basic question or silly question… but although some people think that’s stupid question but some people still often asking about it. Especially someone who don’t have any financial problem and have a lot of money but he or she didn’t know how to spend it or don’t know how to manage it.

in general, when an individual without without money it can be extremely difficult to build wealth. As anyone who even dabbles in the stock market can tell you, money isn’t usually something that just stands still. Until someone reaches the point where he has earned enough money to have reached a certain level of sound financial footing any money he has or doesn’t have create a situation that will generally move in one direction or another. When a person is bringing in more money than he is spending his financial stability can move in the positive direction of “building”. When he spends more than he earns he will move in the negative direction of “losing ground”. For the very financially unstable individual these moves in one direction or another are more likely to also take on a snowballing process in one direction or another.

Sometime someone never feel that he don’t have enough money but actually they have it and more than enough for they daily life. We never describe clearly what is prosperity. For someone who already have their own house, own car, they feel that they already reached their prosperity.

But for someone who already be a millionaire, it hasn’t enough yet. At last, we could say that “money isn’t everything but without money everything is nothing” but we also need to know that we must drive our money and never let your money drive you.

Ok.. have a nice day…

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