Sunday , May 19 2024

Self-financeable Growth (SFG) – How Fast A Company Can Growth

Self-financeable growth is tools how to mesure your company growth. Everyone want to know that starting a business requires cash, and after day by day a business requires even more for working capital, facilities and fixed assest, and operating expenses. But few people understand that a profitable company that tries to grow too fast can run out of cash—even if its products are great successes.

The below calculation is the best measure is Self-financeable Growth (SFG) – How Fast A Company Can Growth?

Please keep in touch in this bog for better understanding for future-

Self-financeable Growth (SFG)
Operating Cash Cycle:Lever -1 Speeding Cash FlowLever -2 Reducing CostLever -3 Raising Price
ParticularUOMBase Case
Account Receivable(DSO)Day(6)(6)(6)
Inventory ( DIO)Day898989
Account Payable ( DPO)Day999
Cost of Sales( CCC)Day747474
Operation Exp. ( Payment Days)Day383838
Income Statement:AmountPer BDTAmountPer BDTAmountPer BDT
Cost of Sales34.000.97134.000.97134.000.971
Operating Exp.3.500.1003.200.0913.500.100
Total Cost37.501.07137.201.06337.501.071
Profit (Cash)-2.50-0.071-2.20-0.0632.500.071
Amount of cash Tied up per sales in BDTPer BDTDayTotal Per BDTPer BDTDayTotal Per BDTPer BDTDayTotal Per BDT
Cost of Sales0.9710.890.8660.9710.890.8660.9710.890.866
Cash Required for OCC0.9120.9080.912
Cash Generated per Sale in BDT( Profit)-0.071-0.0630.071
SFG Rate Caculation:
OCC SFG Rate-7.83%-6.92%7.83%
OCCs Per Year3654.3983654.3983654.398
Annual SFG Rate-34.45%-30.44%34.45%
Compounded Annual SFG Rate-30.14%-27.06%39.33%

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