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Carrying too much inventory is risky and inefficient. The drawbacks of excessively high inventory levels are the high costs of carrying it and the risk that it won’t sell and then you are stuck moving it at a discount or end up eating the costs. There are benefits to carrying inventory that we will now explore. Inventory acts as a buffer against the vagaries of Demand. You want to design enough capacity to accommodate customers when there is a rush. The optimal capacity can be calculated by measuring flow rate and flow time and applying statistics. Inventory decouples supply from demand as you have a buffer which can also enhance your ability to accommodate a rush. Inventory protects against the variability of demand and process time (how long it takes to make a product). You can have operations that make to stock or make to order.

Taking on new projects opens doors to new opportunities. Those opportunities have a value that can be analyzed using option pricing models. When we are valuing new enterprises, startups, or projects, we may not be adequately capturing this in our valuations.

At the end of the day business boils down to numbers. Here is a quick summary of the big picture the numbers side of capitalist enterprise.

Understanding Corporate Finance made it to the Best Corporate Finance Books of All Time

Keynes was a brilliant man who deeply understood money and economics. And his insights weren’t just intellectual and academic. He made two fortunes: one in the stock market and one in the art market. He understood value and investing and put his money where his mouth was.

You could be getting a guaranteed 17+% return on your money right now. It’s a simple investing plan.

I got schooled today in the high cost of being poor. I went to a pawnshop. I wrote about the high cost of credit card debt, and how it destroys any prospect of creating wealth. Now I want to just say a few cautionary words about other lending schemes that are even worse.

Cost–volume–profit (CVP) is an analytic tool based on cost accounting measures. CVP analysis is a framework for figuring out how you get to profitability. Achieving consistent profitability is how you create a sustainable business.

Many of us have a fraught relationship with money. We want it, we fear it, we are anxious we will run out. Did I mention we want it? We want money but we may not be clear on how to get it, keep it, and grow it.

I used to have a partner in a real estate company. He was great guy and an inveterate gambler. He loved to shoot craps in Las Vegas.

I always wanted financial freedom.

I have come to understand the simple step-by-step recipe for transforming your life by creating enough wealth to achieve financial freedom. Just knowing you have a plan and are on a path to independence from wage slavery can eliminate a lot of unnecessary angst.

I used to wait for the big moments when I would need to make crucial decisions that would irrevocably impact the direction of my life and destiny. I would wait hopefully for the auspicious occasion to arise and reveal itself.

The surest way to become wealthy is to save money and invest it in the stock market. The stock market has been the greatest wealth generator of the past century.

The stock market is a great place to invest and build wealth long term. Recently a number of the big brokerage services have gone to charging zero trading fees. This savings is a boon for small investors.

We are all familiar with the names of the wealthiest Americans today, like Bill Gates, Jeff Bezos, and Warren Buffett, but who was the richest American in the late 1700s? Ben Franklin.

Weare all familiar with the names of the wealthiest Americans today, like Bill Gates, Jeff Bezos, and Warren Buffett, but who was the richest American in the late 1700s? Ben Franklin.

The inside fold of the 1970 Mad Dogs and Englishman live double album by Joe Cocker describes Leon Russell, the music director of the tour, as “Master of Space and Time.” That image made a big impression on me as a young teen.

here are four necessary steps to financial independence. They are all related to managing money.

Recently I was asked a question that goes to the crux of the title question. Accounting is a way to track, measure, and report information. Accounting does this by producing financial statements. Accounting is actually quite brilliant and there is a good argument that it spurred the Renaissance and thus the modern world.

The three Rs are necessary skills taught in schools: reading, writing, and arithmetic. They have been the keystones of education since the early 1800s.

Looking back, I was a late financial bloomer. I suspect we all are. I started my career as an engineer in my first career. I have heard that the average person has about seven careers in a lifetime these days. That sounds about right from my experience.

Green grease makes the world go round. Money is how business transacts and sustains itself. Money is the vehicle for how a company operates. It gauges how customers perceive your value proposition.

Who controls the past, controls the future. Who controls the present, controls the past. Money is the link.

Yes. We should all always prepare for a severe market turndown. To be prepared is to be forewarned. Forewarned is forearmed. Preparation prevents piss poor performance.

For most of the last decade crypto seemed to me like a fad. But, of course, Crypto is now a 3 trillion-dollar fad.

Events are moving so rapidly in the crypto space that legacy expertise is outpaced by innovation. This creates an environment where opportunities abound, but it also is an environment where learning, unlearning, and relearning reign. Its exciting and challenging (and lucrative) to keep current and dive deeper as things evolve.

Discussions about crypto can devolve into superficial speculation about trading coins and guessing trends on price. Still, crypto is about big ideas and questions that challenge our thinking, beliefs, and assumptions about modern life.

Gold has been valued as a precious commodity for millennia. No wonder it retains consensus as a store of value. It has stood the test of time.

Cryptocurrencies It is difficult to overstate the importance of controlling the money supply and the dangers and risks of mismanagement.

Blockchains and Bitcoin can seem so challenging and technical but its really built on an old system of debits and credits in a bookkeeping ledger.

We are all familiar with how important it is for an app, phone, website, or any consumer-facing product or service to have a good user interface.

Blockchain is a shared database that differs from traditional databases in how data is stored. Information is kept in blocks, which are cryptographically linked together.

It has taken me more than a decade to digest just how ingenious Bitcoin is. Its like when you first go to a foreign country and realize how many things you took for granted are just socially accepted conventions. Bitcoin, cryptocurrencies and blockchain are like that for rethinking money, property, governments, and lots more.

If the implications of blockchain’s potential come to fruition and create a juster, fairer society, the innovations baked into Ethereum will be thought of as the inflection point.

Altcoins refers to any cryptocurrency that’s not bitcoin or ether.

How are the prices of cryptocurrencies determined? Markets are price discovery mechanisms. Exchanges access markets where buys, sells and trades are made to determine an asset’s price.

NFT stands for non-fungible token. A token that is not fungible represents the unique private digital property. These are digital deeds that prove a digital asset's ownership. NFTs are currently linked with art, although they can certify ownership of any digital asset.

How to Create a Diversified Stock Portfolio.

Finance is empowering. It enables innovation. It empowers big risk takers and bold builders and makes the world better. Finance pulls the future forward.

Can You Read and Interpret a Balance Sheet?