Profit Playbooks

Capital Allocation Part III: Return on Capital business strategy capital allocation financial analysis roic

We're wrapping up a 3-part series (here's part I and part II) on capital allocation – the effective use of profits and cash flow – with a concept called Return on Invested Capital (ROIC). [Sometimes just called return on capital or ROC.]

First, a quick reminder of our balance sheet – we buy or buil...

Capital Allocation Part II: Cash Sources and Uses business strategy capital allocation financial analysis

Sources & uses of cash

This is Part 2 of a series on capital allocation. A quick recap from last week: We defined the 3 uses of profits as capital allocation. They are:

Buy more assets (with the intention of growing sales)
Pay off debt and other liabilities
Pay dividends to owners

Where we ...

A Small Business Capital Allocation Guide business development capital allocation financial health management

In any business (that's any industry, any size, any product), there are generally only 3 ways to use profits:

Buy more assets (with the intention of growing sales)
Pay off debt and other liabilities
Pay dividends to owners

Most finance pros refer to this mix of profit usage as capital alloca...

Sources & uses of cash

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