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It is said that a company is profitable when it generates sufficient income or profit, that is, when your income is greater than its costs, and the difference between them is considered acceptable.

But right when evaluating the profitability of a company to evaluate the relationship between profits or benefits, and investment or the resources used to obtain them.

And to find this performance, making use of indicators, indices, ratios or profitability reasons, of which the main are:

ROA

The rate of return on assets (ROA) measures the profitability of a company with respect to assets it holds. ROA gives an idea of how efficient a company is using its assets to generate profits.

The ROA formula is:

ROA = (Profit / Assets) x 100

For example, if a company generates profits of 4 000, and has total assets of 30 000, applying the formula of ROA:

ROA = (4 000 / 30 000) x 100

It gives us an ROA of 13.3%, i.e., the company has a return of 13.3% over the assets held. Or in other words, the company uses 13.3% of total assets in generating profits.

ROE

The rate of return on equity (ROE) measures a company’s profitability with respect to assets it holds. ROE gives us an idea of a company’s ability to generate profits through the use of capital invested in it and the money it has generated.

The formula for ROE is:

ROE = (Profit / Equity) x 100

For example, if a company generates profits of 4 000, and has a heritage of 60 000, applying the formula for ROE:

ROE = (4 000 / 60 000) x 100

We are an ROE of 6.6%, i.e., the company has a return of 6.6% over the assets it possesses. Or in other words, the company uses 6.6% of its assets in generating profits.

Return on sales

The return on sales measures the profitability of a company with respect to sales generated.

The formula for the rate of return on sales is:

Return on sales = (Profit / Sales) x 100

For example, if a company generates profits of 4 000, and obtains the same period net sales of $ 20 000, applying the formula for return on sales:

Return on sales = (4 000 / 20 000) x 100

It gives us a return on sales of 20%, i.e., the company has a yield of 20% compared to sales. Or in other words, earnings represent 20% of total sales.

In 2004, twenty-three percent of new homes were purchased as investments. With the real estate bubble growing ever larger, and the anticipated high return, it shouldn’t be surprising that investors would purchase real estate. Did you know that there are several ways one can profit from real estate investment?

The practice of buying property and quickly selling at a profit is commonly referred to as flipping. The other side of flipping, is to keep the house for a lengthy time taking advantage of tax incentives and capital appreciation, then selling it. Here is where you figure out the total cost as opposed to the amount saved from a tax write off and then include the interest charges, property taxes, repairs, and insurance along with the regular monthly mortgage.

Over the past decade or so real estate values have risen in the majority of markets. However, with interest rates on the rise one can’t predict how much higher the interest rates will go. Have you heard the statement “… no gain without risk!” Another investment avenue is the foreclosure. This investment also entails a risk and could require substantial cash outlay. However, it is evident that more and more owners are no longer able to pay the mortgage. This situation usually occurs over a period of months.

While the bank usually has to foreclose and perform a power sale, if you purchase this land, be certain of the condition of the residence. It is usual to find the foreclosed properties are in need of repair. When buying real estate, you ought to be prepared to spend the time and effort bringing back the residence for sale. This may take your own skills, the skills of a tradesman, cash outlays, or even the time required to find a reliable contractor. Abandoned real estate is a risk you’re possibility. However, with some additional legal hoops are involved.

To purchase an abandoned property you may find that it’s not clear who has title. In this case, factor in the additional time and cost, to do a title search for possible legal action. Factor in the additional time and cost for title searches and possible legal action. Aside from capital gains and a tax write off plus appreciation, much of your operating cost for the building may be offset by renting. Do consider however, the amount of time and cash spent finding tenants, paying for repairs, and managing the property.

There are numerous profit opportunities in real estate. When buying a building without laying down the cash, or worrying about structural integrity, you may want to consider a safer investment. There are several Paper Investments equally profitable. One recent entry to the investment arena is a consortium (1980) that developed REITs (Real Estate Investment Trusts). These are monetized real estate investments with mortgage-backed securities. These are still high risk and you should speak with a broker before investing.

Attracting Customers normally assumed to already have a product or service of excellent quality and all that remains is to find your ideal customer, know where they are, put together the right message and go get them. But today I want to talk just this part, service or product we offer.

Because no matter if we have a really good niche, if our message is perfect for that niche market and if we are to achieve and the channels we offer the best return on our investment, because it all goes to fret if the product or service is not attractive by itself.

So how must be a product or service so that it is attractive to customers? What features should it be?

Here are five characteristics that product or service must have to be attractive to customers:

1. You must solve a problem. If not fix, repair, amend, improve or alleviate a problem, pain, condition or situation, why would people want it? Why would pay for it? There must be a hefty profit, recognizable, noticeable and measurable to buy and use your product or service.

2. It should be appealing to many. You may have done the best invention of the world, but if only one in ten million people need or want, you will not have many sales. To be worthwhile, you’d have to sell at a high price and then would become even more difficult to sell. It offers a product or service that many want, and sell it will be easy.

3. It must be unique. If your product or service is the first in the industry, that’s better. The truth is that there is very little new under the sun, so your product or service should be different and offer different benefits than it does the rest. If you sell a rose a different name, no longer a rose, but if you can sell a rose that never loses its petals.

4. It must offer instant gratification. If your product or service will use it within a year, why buy now? People do not want to buy seeds, instead, prefer the tree planted grown and bearing fruit. Humans are generally very impatient, and the media have made us even more. As customers do not want the fishing rod, we want fresh fish, filleted, seasoned and served ready to eat.

5. Must be demonstrable. You could say that is a law: seeing believes. For a product or service attractive, the customer should be able to see for yourself how easy it is to use or how fast you can get the benefits. The samples, complimentary sessions and testimonials help us to this.

Analyzing these five points, your service or product … is it attractive?

Rental property depreciation is a highly important concept for those who own or manage rental properties. Understanding how to calculate it is crucial for maximising your tax deductions and slashing your overall real estate taxes.

So what exactly is rental property depreciation? In simple terms, it’s the decrease in value of property over time as the building structure begins to wear and tear with age.

Depreciation can only be used for tax purposes on rental properties; you cannot claim depreciation for the home that you live in. It’s also important to note that rental property depreciation only applies to the building itself, and not the land upon which it is situated.

How to Calculate Depreciation for Non-Residential Rental Properties

There are a few different methods for making this calculation, however the most common and straightforward method is the so-called “straight line” depreciation method. Using this formula, annual depreciation is calculated by taking the purchase price of the building minus land value, and dividing it by its useful life span.

When it comes to the useful life span of the structure, you’ll need to refer to tax rules and local regulations. Laws vary, but generally you can find a fixed number based on the type and age of the structure, or a formula to calculate the building’s life span.

As an example, say you purchase a property for $150,000 with a land value of $50,000, and the property has a useful life span of thirty years, according to local laws. Annual depreciation is as follows:

150,000 – 50,000/30 = 3,333.33

Of course, it’s important to note that the land value may change according to market conditions. Therefore, you will need to calculate rental property depreciation independently each tax cycle.

The above formula applies to non-residential rental properties, like hotels, motels, and business rentals.

How to Calculate Depreciation for Your Residential Rental Properties

If you own residential rental buildings or rent out your home, then you need to calculate rental property depreciation using the same formula, but the useful life span of the building is assumed to be 27.5 years. This calculation should be used for any home or residential rental building earning 80% or more of its revenue from rental income.

For the first year that you own a rental property, depreciation should be calculated using a pro-rated formula, depending on the month in which you purchased your property. Pro-rated depreciation is calculated as follows:

Annual Depreciation = Purchase Price – Land Value X Depreciation Percentage

Use the following table to calculate residential depreciation:

January 3.485% February 3.182% March 2.879% April 2.576% May 2.273% June 1.970% July 1.667% August 1.364% September 1.061% October 0.758% November 0.455% December 0.152%

For example, for a residential property purchased in November for $150,000 with a land value of $50,000, depreciation for the first year is as follows:

(150,000 – 50,000) X 0.00455 = 455

How Rental Property Depreciation Affects Your Real Estate Taxes

In the short term, depreciation can be counted on your annual tax return as a rental expense, resulting in a deduction from taxes owed. If you did not know that this option was available and thus did not claim this deduction in years past, you should know that you can claim up to 3 years prior depreciation on one return.

When you sell your rental property, you should also be aware that having claimed rental property depreciation on your tax return will result in higher capital gains taxes. In addition to being taxed on any profit from the sale of your property, you’ll also have to pay 1/4 of the amount that you have claimed in deductions for depreciation of the property.

Overall, you still benefit monetarily from claiming the deduction, however you may want to set aside some of the offset for the future in case you should decide to sell your rental property.

Investing into stocks can be profitable in more ways than one. In fact there are 3 different ways which someone who buys a stock can make money off of that investment.

1. Appreciation

One way that stocks make money for investors is through appreciation. If you can buy a stock at $20 and sell it for $40 you have doubled your money. In general stocks tend to go up over the long term, which is why the idea of buy and hold has become so popular. But if you look for stocks that are both technically and fundamentally strong you are likely to make a higher return then the rest of the market.

2. Dividend Income

Dividends can be a nice way to make a little extra income in the stock market. When a stock pays out a dividend everyone who is investing into that stock gets paid. This can become a nice cash flow as the dividends keep coming.

If a company has a dividend yield ratio of 10% then an investor would expect to make 10% of their investment back every year in dividends alone. That means after 10 years or so they should break even just on dividends. Not bad considering that they are only an extra perk.

3. Selling Call Options

Another way to make money off of stock market investments is by selling options. These are just contracts which give the buyer the right to buy a stock at a specific price on or before a specific date. For example if you own stock XYZ and it is trading at $50 you can sell the $55 call option on it and make a premium from that, by doing so you actually risk getting called out of the position at $55.

If the stock goes above $55 and you get called out you might miss a huge profit. But if it stays below $55 you will not only profit from what the stock did do, but you will also make money from the option premium you collected.

By selling an option you take on some additional risks, but the idea is that the option premium you take in might make it all worth it.