Tuesday, January 3, 2017

The value of N: Owing vs OwNing

Letter N is not your popular ‘A’ or ‘Z’ letters of the 26 English alphabets. However, it has some popularity (or value if you like) in the finance world – both at personal and corporate levels.

The difference in the spellings of OWING and OWNING is the letter N. A single letter that can determine how healthy and wealthy an individual or an organization is, per given time.

Inconsequential as it may appear, Letter N can change the outcome of several key balance sheet ratios like working capital, leverage and capitalization. It can also determine who the banks treat better than others. 

To owe is to be liable AND to own is to be capable. Owing relates to LIABILITY and Owning, to ASSET. More assets than liability increases the net worth of an individual or an organization.

Not to get into the liability creates asset discourse; paying more attention to the Letter N sounds like the path towards riches and self-sustenance.

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