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A business model includes both inputs and processes that generates outputs or outcome.
Generally a business model would not change as frequent as the business plans.
The outcome of a business is maximising return on equity. ROE = ROS x ROA x EM (equity multiplier)
The business model include both income and capital models.
Income or profit is determined by its cost volume profit analysis with Revenue generated by price and volume minus and total variable cost by variable cost pre unit and volume. Fixed costs remain constant regardless of volume.
Capital or balance sheet model include working capital plus fixed assets which should equal to LT liability and Equity. This model shows to what extent leverage or gearing is applied in the business, a right balance between own and borrowed.
The overall business model is illustrated and summarised by the Dupont ROE format.
The right business strategies must be applied with the models
A business model includes both inputs and processes that generates outputs or outcome.
Generally a business model would not change as frequent as the business plans.
The outcome of a business is maximising return on equity. ROE = ROS x ROA x EM (equity multiplier)
The business model include both income and capital models.
Income or profit is determined by its cost volume profit analysis with Revenue generated by price and volume minus and total variable cost by variable cost pre unit and volume. Fixed costs remain constant regardless of volume.
Capital or balance sheet model include working capital plus fixed assets which should equal to LT liability and Equity. This model shows to what extent leverage or gearing is applied in the business, a right balance between own and borrowed.
The overall business model is illustrated and summarised by the Dupont ROE format.
The right business strategies must be applied with the models
