What are the different ways to increase your own capital return?
different ways to increase the return on your own capital include increasing sales turnover, increasing profitable margins, transition to cheaper financing and reducing tax obligations. Increasing sales turnover should lead to increased profits, which will increase the overall return on equity. If the company is unable to increase sales, it should look at the expansion of its profitable margins, so it earns more money for sale. Transition to cheaper financing options can increase the return on the company's own capital by reducing debt obligations. Finding ways to reduce business taxes will increase the return on equity, because the calculation is based on tax profits.
The best way to increase your own capital return is to find a way to sell multiple products or services of a company. Although it seems to be an obvious possibility, not all businesses are placed so that such a task fulfills. Business should invest in research and marketing to find out how he can use his forcesnot to overcome its weaknesses. It can find that design improvements, improving quality or adding a function can lead to a significant increase in sales.
If it is not possible to increase sales, the company can find ways to expand its profit margins. This can be achieved by changing the design of the product, finding new suppliers, changing packaging or reducing production costs. An alternative to reducing costs is to find ways to increase the value of the product so that consumers are willing to pay more. This may include the addition of other features for increased price and accepting marketing strategies that will change the perception of the consumer of the product or company. Strengthening the brand often leads to a company to increase its prices, which increases profit margins and the return on equity.
The use of cheaper financing options is another method for increasing return on equity. Especially if the business borrowedMoney during an economic decline can pay more interest rates than currently offered. If the company has available finances, it could repay the debt soon and then apply for debt for new rates. During the recession or depression, businesses should only borrow what is absolutely needed, and then wait for the rates to be better. Businesses should surely be considered all their possibilities such as the use of your own capital or leasing.
Tax liability reduction may increase the return on equity, although this is not always possible for most businesses. Some industries have more tax reliefs and incentives than others. It is best for business to meet an accountant who has experience of manipulating clients in their specific industry to find out what options are available. For example, information technology businesses (IT) receive a lower tax rate in the US because the government wants to encourage investments in this area.