More Details About Debt Consolidation

by Zane Hamlin
(from Goarticles.com)

Debt Consolidation is a service that allows you to take a low interest rate loan to pay off your accumulative debt.It is the best option to get rid of your debts.Debt consolidation services helps to relieve the burden of high monthly payments on credit cards and other types of unsecured debt.Most of people discover that higher balances direct to higher interest rates until they can no longer pay for the debt they have mounted up.Debt Consolidation can be said as a credit creation facility that is utilized to pay off earlier debts of the borrower along with interest.In this type of service,borrower indeed borrows a loan,to pay off all previous loans and debts.

The borrower returns the consolidation loan together with interest.Because of multiple loan borrowing like car loan and a home loan,many a times the borrower is in debt to several lenders.The borrower is not obliged and loaded by many loans for a very long time in order that the consolidation loan is used to pay off all these multiple borrowings. The debt consolidation loan can be secured or non secured loan.Borrower has to pledge some precious asset to the lender in case of a secured loan. Usually,many lenders like better to secure debt consolidation loan with an asset.There is very rare case of non secured consolidation loan. If this case occurs,they have to secure source of high income or is supported by a guarantee.It is very tough to come by the debt consolidation loan. Before availing this facility,many strict laws,rules and regulations are followed by the banking and finance organizations.

Very few lenders like to compute the total cost of previous debts and the interests charged on them.After that,the lenders calculate the amount of credit that they are willing to offer and then quote the amount along with the interest to the applicant.The credit history of the applicant is examined by the lenders at the time of the process of sanctioning.They will also keep information about applicant's bank and credit card companies.The first relative's credit history is also taken into consideration,if the applicant is married or has children.In such case,the rate of interest is low and time period will be long,which helps the borrower to repay the loan.
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Advertising Sales Ratio

Definition

1) Total advertising expenditure divided by total sale over some time period. Useful for evaluating how effective the company's advertising campaigns have been at generating sales; all other things being equal, the lower the ratio, the better.

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Calculating Return on Sales

GETTING STARTED

Although return on sales (ROS) is another tool used to analyze profitability, it is perhaps a better indication of efficiency. In some business environments, it is also called margin on sales percentage, or net margin.

What It Measures
A company’s operating profit or loss as a percentage of total sales for a given period, typically a year.

Why It Is Important
ROS shows how efficiently management uses the sales dollar, thus reflecting its ability to manage costs and overhead and operate efficiently. It also indicates a company’s ability to withstand adverse conditions such as falling prices, rising costs, or declining sales. The higher the figure, the better a company is able to endure price wars and falling prices. Return on sales can be useful in assessing the annual performances of cyclical companies that may have no earnings during particular months, and of companies whose business requires a huge capital investment and thus incurs substantial amounts of depreciation.

How It Works in Practice
The calculation is very basic:
operating profit / total sales × 100 = percentage return on sales.

So, if a company earns $30 on sales of $400, its return on sales is:

30 / 400 = 0.075 × 100 = 7.5%

Tricks of the Trade

• While easy to grasp, return on sales has its limits, since it sheds no light on the overall cost of sales or the four factors that contribute to it: materials, labor, production overhead, and administrative and selling overhead.

• Some calculations use operating profit before subtracting interest and taxes; others use after-tax income. Either figure is acceptable as long as ROS comparisons are consistent. Obviously, using income before interest and taxes will produce a higher ratio.

• The ratio’s operating profit figure may also include special allowances and extraordinary non-recurring items, which, in turn, can inflate the percentage and be misleading.

• The ratio varies widely by industry. The supermarket business, for example, is heavily dependent on volume and usually has a low return on sales.

• Return on sales remains of special importance to retail sales organizations, which

can compare their respective ratios with those of competitors and industry norms.

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COMMON MISTAKES of SWOT ANALYSIS

Focusing just on a few issues
Don’t just focus on the large, obvious issues, such as a major competitor encroaching on
your business. You need to consider all issues carefully, such as whether your Internet
system provides everything you need or whether your staffing levels are as they should
be.

Completing your SWOT analysis on your own
Do take advantage of other people’s contribution when you’re completing your SWOT analysis; don’t try and do it alone. Other people’s perspectives can be very useful, particularly as they may not be as close to the business as you are. This distance can often help them see answers to thorny questions more easily, or to be more innovative: we all get stuck in a rut at points.

Using your analysis for the next ten years
Don’t do a SWOT analysis once and then never repeat the exercise. Your business environment will be constantly changing, so use SWOT as an ongoing business analysis practice.

Relying on SWOT to provide all the answersUse SWOT as part of an overall strategy to analyze your business and its potential. It is a useful guide, not a major decision-making tool so don’t base major decisions on this analysis and nothing else.

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