Sometimes the world of business and finance can be complicated or just plain hard to understand for real people. Accounting and tax rules are getting more complex, making it even more difficult for the average person to understand.
The problem with the complexity is that most of us work for businesses and we invest our pension and retirement savings in them – either directly or through investment funds – so it is a good idea to have at least a basic understanding of how things work.
Since private business does not disclose financial information, understanding the financials of your own employer can be even more perplexing. But one Saskatchewan business owner has developed an easy explanation. Tony Zuk is a founder of Zu in Saskatoon and he asks his team members: How much should it cost a business to generate one dollar of revenue?
Employees of the organization can understand that concept quite easily. Nationally, the latest figures show corporate operating margins are just a little more than seven per cent. In other words, it costs 93 cents to earn a dollar of revenue.