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Ask for the Cash: Convince Your Customers to Pay You in Advance

Growth Institute

In fact, in most years the membership fees Costco collects cover about two-thirds of their operating profit. By collecting the funds in advance to cover most of their operating costs, and by turning their inventory faster than they pay their suppliers, Costco can run the business on gross profit margins much lower than its competitors can.

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How ‘Titanium Economy’ Companies Can Continue To Outperform

Chief Executive

from 2013 to 2018, outpacing revenue growth of S&P 500 companies, which came in at an average of 2.9%, the authors found. Their operations look nothing similar to this perception,” said Padhi, who came from an engineering and management background, unlike most McKinsey consultants. By “industrial technology,” Padhi et al.

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What Netflix and Starbucks Know About Cash Flow

Harvard Business Review

When customers can foresee their demand for a product or service rising and trust a company enough agree to a monthly payment (thus providing regular cash flow), they are essentially enabling the company to build what customers want. Improving cash flow is extraordinarily healthy for any business.

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How To Really Measure a Company's Innovation Prowess

Harvard Business Review

Return on equity (net income divided by equity) results from multiplying three key operating ratios: Profitability (net income over sales). Operating efficiency (sales over assets). Investment efficiency (ideas explored divided by total capital and operational investment). Financial leverage (assets over equity).

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What’s Missing from Annual Reports

Harvard Business Review

Take the example of Harvey Norman , an Australia-based household-goods retailer that operates under various brands and has stores in several countries. The company’s 2013 annual report contained the usual statements on income, changes in equity, and cash flows — standard stuff.

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How to (Gradually) Become a Different Company

Harvard Business Review

vehicles decreasing from 40% of total in 2000 to 17% in 2013), by destination (e.g., from 80% in 2000 to 50% in 2013), and by exposure to the economic cycle. Accordingly, it has systematically published figures about the evolution of its business portfolio in terms of sales by segment (e.g.,

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How U.S. Businesses Can Succeed in India in 2015

Harvard Business Review

America’s largest insurer, Allstate, announced plans to invest $1 billion in its India operations. In June 2013, Dallas-based Mary Kay exited from India after six years and over $20 million invested. Boeing is America’s largest exporter and the only American defense contractor to have crossed $2 billion in sales to India.