Josh,

I’m currently looking for a manufacturer. Anyone that has tried to find a manufacturer online can agree when I say there are many scams, especially companies claiming to be overseas manufacturers. I know some people that actually go overseas to see if it’s valid manufacturer. However, I work full-time and that option isn’t available to me. What would you recommend?

Thank you,

T.K.
Hi T.K.,

While this isn’t my expertise, my suggestion would be to find a network of entrepreneurs who have had their products manufactured that have the experience and can give you proper advice. I might try a website like www.mfg.com and you can always do a search of a prospective company on the web and see if you can find either positive or negative feedback.

Good luck!

Net Working Capital - Total of all current assets less total of all current liabilities.
Net Worth - Value of a firm’s to its owners (stockholders/shareholders) as shown on its balance sheet. It is the sum of the issued share capital, retained earnings, and capital gains. Also called net value.
Operating Statement - Detailed periodic report of the financial results of a firm’s operations, as compared with budgeted and previous period’s figures.
Overhead - Cost or expense (such as for administration, insurance, rent, and utility charges) that (1) relates to an operation or the firm as a whole, (2) does not become an integral part of a good or service (unlike raw material or direct labor), and (3) cannot be applied or traced to any specific unit of output. Overheads are indirect costs.
Preferred Stock - Class of stock (shares) that pays fixed and regular interest income, instead of a dividend (whose payment and amount depends on factors beyond stockholder’s control). Holders of preferred stock have claim over the firm’s earnings (and assets in case of liquidation) ahead of (senior to) the claim of holders of common stock (ordinary shares) but behind (junior to) the claims of bondholders and all other creditors. Depending on …

Income Stream - The flow of money generated by a business.
Indirect Cost - The cost not directly attributable to the manufacturing of a product.
Indirect Labor - Employees or workers (such as accountants, supervisors, security guards) who do not directly produce goods or services, but who make their production possible or more efficient. Indirect labor costs are not readily identifiable with a specific task or work order. They are termed indirect costs and are charged to overhead accounts.
Intangible Asset - Something of value that cannot be physically touched, such as a brand, franchise, trademark, or patent.
Internal Rate of Return - IRR. The rate of return that would make the present value of future cash flows plus the final market value of an investment or business opportunity equal the current market price of the investment or opportunity. also called dollar-weighted rate of return.
Inventory Turnover - The ratio of a company’s annual sales to its inventory; or equivalently, the fraction of a year that an average item remains in inventory. Low turnover is a sign of inefficiency, since inventory usually has a rate of return of zero. For instance, if a company was able to generate $10 million in sales but averaged $5 …

Economic Order Quantity (EOQ) - The amount of orders that minimizes total variable costs required to order and hold inventory.
Earnings - Revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Earnings are the reason corporations exist, and are often the single most important determinant of a stock’s price. Earnings are important to investors because they give an indication of the company’s expected future dividends and its potential for growth and capital appreciation. That does not necessarily mean that low or negative earnings always indicate a bad stock; for example, many young companies report negative earnings as they attempt to grow quickly enough to capture a new market, at which point they’ll be even more profitable than they otherwise might have been.
Earnings Per Share (EPS) - Total earnings divided by the number of shares outstanding. Companies often use a weighted average of shares outstanding over the reporting term. EPS can be calculated for the previous year (”trailing EPS”), for the current year (”current EPS”), or for the coming year (”forward EPS”). Note that last year’s EPS would be actual, while current year and forward year EPS would be estimates.
Equity - Total assets minus total liabilities; …

Part two in my series of “Financial Terms You Should Know”

Capital stock - Total amount of a firm’s capital, represented by the value of its issued common and preferred stock (ordinary and preference shares).
Cash flow - Incomings and outgoings of cash, representing the trading (operating) activities of a firm. In accounting, cash flow is the difference in amount of cash available at the beginning of a period (opening balance) and the amount at the end of that period (closing balance). It is called ‘positive’ if the closing balance is higher than the opening balance, otherwise called ‘negative.’ Cash flow is increased by (1) selling more goods or services, (2) selling an asset, (3) reducing costs, (4) increasing the selling price, (5) collecting faster, (6) paying slower, (7) bringing in more equity, or (8) taking a loan. It is termed the ‘life blood’ of a firm—more firms (including the asset-rich ones) go out of business due to an anemic cash flow than for any other reason. However, the level of a firm’s cash flow is not a good measure of its performance, and vice versa: high levels of cash flow do not necessarily mean high or even any profit; and high …