Financial Performance is the Basic Unit of Measure for Businesses by Stephen Brown
Wednesday, April 22nd, 2015
Financial performance is the basic unit of measure for businesses.
Business 101 taught us calculations such as:
ROI (return on investment). The formula for return on investment, sometimes referred to rate of return, measures the percentage of return on an investment. ROI is used to measure profitability for a given amount of time. It is expressed as –
Another formula relevant to this discussion is Future Value with Continuous Compounding. The future value with continuous compounding formula is used in calculating the later value of a current amount of money. Use of the future value with continuous compounding formula requires understanding of 3 general financial concepts, which are time value of money, future value as it applies to the time value of money, and continuous compounding. It is expressed as –
Future Value – Future Value (FV) is a formula used in finance to calculate the value of a cash flow at a later date than originally received. This idea that an amount today is worth a different amount than at a future time is based on the time value of money.
The future value with continuous compounding formula is used in calculating the later value of a current sum of money. Use of the future value with continuous compounding formula requires understanding of three general financial concepts, which are time value of money, future value as it applies to the time value of money, and continuous compounding. Let’s focus on the last concept…
Continuous Compounding – The compound interest formula calculates the amount of interest earned on an investment when the amount earned is reinvested. By reinvesting the amount earned, an investment will grow faster in value based on the effect of compounding.
Now, shift your thoughts to consider your investment in IFMA / FMCC membership.
- By being a member, you gain value or have ‘earnings’ or dividends derived from the webinars, podcasts, white papers, and much, much more.
- As a member, you have access to a significant subset of IFMA professionals from whom you can secure advice, suggestions, support, and assistance.
- This network can deliver another dividend
- As your network expands, you realize key associates and potential contributors and you can forge partnerships and alliances from the mutual interests in special skills.
- Synergies develop and greater dividends are realized
- Your participation in FMCC programs exercises your mind and exposes you to an ever-increasing register of knowledge. ‘Knowledge is power’ and power has value.
- You guessed it…there is another dividend credited.
- Finally, your contributions to FMCC – as a podcast presenter, as a blogger, or actively commenting on the current social media exchange displays your FM awareness to others. As they gain appreciation for your knowledge, the ‘interest’ in your services increases.
- I see another dividend on the horizon…
Your membership is the investment and these are but a few examples of the interest and dividends that will add to the value of your organization. FMCC provides an opportunity for you to nurture your business.
Whether speaking of your financial position or your FMCC membership, compounding the dividends will increase the values and make you more prosperous.
The FM Consultants Council announces the appoinment of Stephen Brown as Membership Coordinator. As a member of the Strategic and Tactical Action Group of the Council, Stephen will engage the members to maximize the participative value and the mutual benefits gained from the Council involvements.
Stephen is principal with FM-adviso, Ltd. and is on assignment based in Saudi Arabia.
Thanks to the FMCC Sponsors:
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