Making Money With Your Business, Profit and Cash Flow, Five Sustainable Companies That Make a Lot of Money
Find Angel Funding & Venture Capital for Business Startups, Entrepreneurs, & First Time Founders – Episode 10
This video is part of my series - Find Angel Funding & Venture Capital for Business Startups, Entrepreneurs, & First Time Founders, learn more by visiting https://bit.ly/3hExYJX
It is time to make money! You have been through a couple of rounds of market testing now you feel like you are on to something. The next step is to run the numbers to make sure that the business is sustainable. There are two sides to making money, profitability and cash flow.
Profitability is the difference between the expenditures of a business and its revenues. Typically, businesses sell their products or serviced for more than their purchase price or costs. The difference between revenue and expenses is profit. For example, if you buy a car for $5,000 and sell it for $7,000, you make a $2,000 profit.
Positive cash flow is different. It means more money is coming in than going out, and you have enough cash in your business bank account to pay your bills. There is a significant difference.
In the previous example, you bought a car for $5,000 and sold for $7,000. If you purchased the car using a credit card and sold the car immediately, your current cash flow would be $7,000. You sold the car before you paid for it. When you pay off the car, your cash flow will match your profit of $2,000. This is assuming no interest expense.
If you did keep a balance on your credit card or did not pay off the car immediately, your interest expense will reduce your profitability and cash flow, If you never pay your credit card, your cash flow from the transaction will remain $7,000.
Cash flow can be used to repay creditors, pay dividends and interest to investors,
engage in buybacks, investments in acquisitions for inorganic growth, investments in innovation for organic growth, or debt reduction. More cash allows for more maneuverability for a company. This can allow for positive growth during economic booms and flexibility during an economic downturn, regardless of the cause of those bad times, e.g. the broader market, the industry, or the company itself.
Here are five examples of companies that have consistently make a lot of money.
Free Cash Flow (FCF)
Debt to Equity Ratio (D/E)
1-Year Stock Performance
$7.17 billion (TTM ended in 06/20)
0.61 (for the three months ending 06/30/20)
55.38% (since 12/31/19)
0.71% (as of 8/13/20)
$2.11 billion (TTM ended in 06/20)
1.94 (for the three months ending 06/30/20)
-4.39% (since 12/31/19)
4.20% (as of 8/13/20)
$4.52 billion (TTM ended in 06/20)
0.57 (for the three months ending 06/30/30)
32.47% (since 12/31/19)
0.98% (as of 8/13/20)
$1.84 billion (TTM ended in 04/20)
0.85 (for the three months ending 04/30/20)
11.58% (since 12/31/19)
2.85% (as of 8/13/20)
$1.26 billion (TTM ended in 06/20)
0.78 (for the three months ended in 06/30/20)
-2.86% (since 12/31/19)
3.99% (as of 8/13/20)
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