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We can contribute money into the business, and we can borrow money from the bank. In both cases we are adding cash into the bank account, but are we increasing equity in both cases?
If we want to increase the value of a business, that means we have to get that equity section of the balance sheet up as high as possible. If we are looking to sell the company, then this is a must. Even if you plan to retire with the company, you should still manage it this way, because you never know.
This lesson looks at a number of different transactions, and whether or not, and how they affect Equity in a business.
How well do you understand Equity?
When you understand how to manage a business from the equity section, then you’ll understand precisely why this is so important. Then you’ll understand how to reverse engineer this process, and build your strategies around growing the book value of the business.
As you watch the video, pause it, before I give you the answers. I hesitate on purpose, so that you can do this. Test your knowledge.
How did you do?
Use the form on the left and let me know.