Increase Throughput to Increase Cash Velocity
Continuing our cash velocity discussion, let talk about Increasing Throughput. Throughput (as defined in Goldratt’s Theory of Constraints Throughput Accounting) is sales revenue minus truly variable costs. Therefore we can increase your throughput by either 1) increasing sales, 2) increasing our selling prices, or 3) decreasing our truly variable costs. Let’s start with the last … Continue reading Increase Throughput to Increase Cash Velocity
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