Stewarding Well: Exercising Self-Control in Spending and Giving

The final fruit of the Spirit is self-control. When we hear that term, our minds often go straight to resisting temptation — avoiding that extra dessert, holding our tongue in a heated moment, or passing up an impulse purchase.

But self-control runs much deeper than momentary restraint. It’s about aligning our actions with godly wisdom and long-term values. In the financial realm, self-control not only guards against overspending but also ensures our generosity is Spirit-led rather than emotionally driven.

It might surprise you that even our giving requires self-control. While the world often celebrates extravagant generosity, the Bible reminds us that not all giving honors God. Some people find themselves in financial trouble, not because they’ve overspent on themselves, but because they’ve given beyond their means — motivated by guilt, pride, or the desire for approval.

True self-control helps us navigate both sides of the financial equation: when to say “no” to unnecessary spending and when to give thoughtfully, as the Holy Spirit leads.

The Dangers of Unchecked Spending and Impulsive Giving

The Bible is filled with warnings about the consequences of poor financial management:

“The rich rule over the poor, and the borrower is slave to the lender.”
Proverbs 22:7

“He who loves pleasure will be a poor man; he who loves wine and oil will not be rich.”
Proverbs 21:17

Whether it’s overspending on pleasures or giving to impress others, a lack of self-control leads to debt, stress, and missed opportunities to use our resources wisely.

Jesus cautioned against performing acts of charity for the wrong reasons:
“Take heed that you do not do your charitable deeds before men, to be seen by them. Otherwise, you have no reward from your Father in heaven.”
Matthew 6:1

Generosity should never be a tool to seek validation or soothe a guilty conscience. Spirit-led giving, balanced with financial stewardship, honors God and builds peace in our lives.

Cultivating Financial Self-Control

So how do we grow in self-control? It starts with intentional, Spirit-led living. Self-control is not self-generated discipline alone; it’s a fruit of the Spirit cultivated through prayer, wisdom, and surrender to God’s guidance.

Paul highlights this quality as essential for believers:
“For the grace of God… teaches us to say ‘No’ to ungodliness and worldly passions, and to live self-controlled, upright and godly lives in this present age.”
Titus 2:11–12

And Peter reminds us to actively pursue it:
“For this very reason, make every effort to add to your faith goodness; and to goodness, knowledge; and to knowledge, self-control…”
2 Peter 1:5–6

Here are some practical, biblical steps to develop financial self-control:

  1. Ask God to transform your perspective on money.
    “I can do all things through Christ who strengthens me.” (Philippians 4:13)
  2. Seek wisdom to establish a spending and giving plan.
    “If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault.” (James 1:5)
  3. Let the Holy Spirit direct your charitable giving beyond your tithe.
    “You are to receive the offering for me from everyone whose heart prompts them to give.” (Exodus 25:2)
  4. Pause before making unplanned financial decisions. Ask yourself:
    • Why do I want to spend or give this money?
      • Am I meeting a true need or reacting impulsively?
      • What adjustments will I need to make if I use this money now?
      • Is this Spirit-led or emotionally driven?

If the decision aligns with wisdom and biblical stewardship, adjust your budget accordingly, ensuring you’re not sacrificing long-term stability for a temporary impulse.

The Reward of Self-Control

As you consistently practice self-control in both spending and giving, it will become easier and more natural. The reward isn’t deprivation — it’s peace of mind, financial freedom, and the joy of being a faithful steward of God’s resources.

Self-control guards us against debt, stress, and the temptation to find our identity in material things or the approval of others. And it positions us to give generously in ways that truly honor God.

May we ask the Lord daily to help us exercise self-control, trusting Him to meet our needs and lead us in wise, Spirit-directed generosity.

Discussion Questions:

  1. In what areas of your finances do you find it hardest to practice self-control? How can you invite God into those decisions?
  2. Have you ever struggled with giving impulsively or for the wrong reasons? How can you better discern when and how to give?
  3. What practical steps can you take this week to grow in self-control regarding your spending, saving, or giving habits?
  4. Think of a time when practicing financial self-control brought you peace or helped someone else. How did it impact your relationship with God or others?
  5. How might growing in self-control influence other areas of your life, such as your relationships, time management, or health habits?

Is Your Business Healthy? Let the Numbers Tell the Story

Over the past few weeks, we’ve discussed how to create and understand your financial statements. Now it’s time to turn our attention to reviewing and assessing those statements.

Regularly analyzing your financial data is essential to:

  • Determine if your business plans are working
  • Identify problems such as theft or fraud
  • Evaluate how your business compares to others in your industry
  • Spot trends that may positively or negatively affect your revenue

Are Your Plans Working?

Your cash flow worksheet was based on projected monthly sales over two years. You made critical business decisions—such as hiring staff, leasing space, and applying for financing—based on those projections.

If your actual revenue is falling short of projections, you may be burning through cash faster than expected. Identifying that early allows you to make adjustments, cut expenses, or secure additional funding.

On the flip side, if your revenue is exceeding expectations, you might be struggling to meet demand or maintain excellent customer service. In that case, you may need to hire more staff or set clearer expectations with customers regarding delivery times.

Identifying Problems

When I owned a restaurant, we were required to complete a weekly profit and loss statement and submit it to headquarters along with our royalty payment. Two numbers I always paid close attention to were payroll and cost of goods sold (COGS).

Our goal was to keep payroll under 22% of revenue and COGS under 35%. If either number was too high, it triggered an investigation. Here are some examples:

Payroll Red Flags

  • Overstaffing during slow periods: I reviewed scheduling during off-peak hours and made necessary adjustments.
  • Employees clocking in early or out late: I compared timecards to the schedule. One student used to come in early to do homework, but I didn’t realize he was on the clock!
  • Overtime pay: This often happened when a nearly full-time employee picked up extra shifts. We learned to ask part-time staff to cover instead.

Inventory Red Flags

  • Improper food preparation: Mistakes led to waste. We retrained employees or reminded them to follow special instructions more carefully.
  • Excess food on the buffet: Supervisors learned to reduce what was put out in the last 30 minutes of service.
  • Ordering errors: Overstocked perishables spoiled; running out meant buying from local stores at higher prices.
  • Theft: This included employees eating food without paying, giving away food, or failing to ring up sales and pocketing the cash.

Even if you’re not in the food service business, these examples illustrate how to track down the causes of higher-than-expected costs.

Comparing to Industry Standards

Analyzing your financial statements also helps you understand how your business stacks up against others in your industry. Industry benchmarks are available through association data, IBISWorld reports, and other sources.

For more on this, check out my blog: Comparing Your Financial Ratios to Industry Standards – Susan’s Reflections

Spotting Financial Trends That Spell Trouble

Declining sales volume is a major red flag. A brief dip might be seasonal or due to temporary competition. But if the trend continues, take a closer look:

  • Customer service issues: Even one rude or careless employee can cost you business. Many customers won’t complain—they’ll just leave.
  • Product quality issues: Poor-quality goods can lead to returns and dissatisfied customers.
  • Missed deadlines: Late deliveries frustrate clients. Evaluate every step in your supply chain to find and fix delays.

Rising accounts receivable can signal that your customers are struggling to pay. This slows your collections, reduces cash flow, and makes it harder to pay your own suppliers. If your receivables are growing:

  • Identify which customers are paying late and ask why.
  • Consider adjusting their credit limits or payment terms.
  • Project your cash flow for the next few months.
  • Talk to your banker about a line of credit, and ask suppliers for more favorable terms if needed.

Declining profit margins are another warning sign. Investigate the root cause. It could be:

  • Rising supply costs: Due to inflation, fuel prices, or shortages. Consider discontinuing low-margin items or sourcing more affordable alternatives.
  • Increased wages: If labor costs have risen, look for ways to improve productivity or automate processes.
  • Higher operating expenses: These might include utilities, insurance, or telecom services. Shop around for better rates, reduce waste (like leaking pipes or lights left on), and review whether you’re paying for services you don’t need.

Final Thoughts

Every business is different, but all must control costs and protect profit margins. Assessing your financial ratios regularly helps you identify problems early—before they impact your bottom line. Use the examples above as a guide to evaluate your own financials, make informed decisions, and position your business for long-term success.

If you’d like help reviewing your financial statements or identifying potential issues, don’t hesitate to reach out. I’m here to support you! You can email me at susan.ball5@aol.com.

Financial Help with a Gentle Heart: Extending Mercy in Money Matters

The eighth fruit of the Spirit is gentleness. When I think of gentleness, I picture a mother lovingly cradling her baby in her arms. She carefully supports her infant’s head, providing the nourishment and love the child needs. Paul describes this in his first letter to the Thessalonians: “We were gentle among you, just as a nursing mother cherishes her own children” (1 Thessalonians 2:7).

It’s natural to be gentle with an infant or an elderly person who is frail and in need of assistance. But it’s not always easy to be gentle when you’re bailing someone out of trouble or when they’ve wronged you.

  • How do you respond to the person who has failed to repay the money they borrowed from you?
  • How do you react to the person who just caused significant damage to your vehicle?
  • How do you assist a relative who has gotten himself into a financial mess—again?

Hopefully, you respond with gentleness and the love of Christ.

True gentleness can be defined as “treating others as you want to be treated; showing mercy and forgiveness without judgment.” In terms of money, gentleness can be applied to helping someone in need in a way that maintains their dignity and self-esteem. This means offering financial assistance without judgment. If I am showing gentleness, I cannot berate someone for their financial difficulties. In fact, gentleness may even require me to forgive the debt they owe me, just as Christ forgave my much larger debt.

Gentleness in Helping Others

If the Lord has provided for your needs, He expects you to help others: “But whoever has this world’s goods, and sees his brother in need, and shuts up his heart from him, how does the love of God abide in him?” (1 John 3:17).

It’s easy to feel compassion and gently help someone who has faced financial setbacks due to illness, an accident, a job layoff, or a national economic downturn. But it can be more difficult to extend compassion to someone who has mismanaged their money, lived beyond their means, or made reckless investments in hopes of getting rich quickly. You might even feel that their difficulties are the result of sin and find yourself reluctant to help. However, gentleness compels us to help others without making them feel ashamed. Galatians 6:1 reminds us, “If someone is caught in a sin, you who live by the Spirit should restore that person gently.”

If you struggle with gentleness, remember that fortunes can change quickly. Today, you might be in a position to give, but tomorrow, you might need help yourself: “Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle” (Proverbs 23:5).

Offering Assistance with Gentleness

Seek God’s direction before offering help: “But the wisdom that is from above is first pure, then peaceable, gentle, willing to yield, full of mercy and good fruits, without partiality and without hypocrisy” (James 3:17).

Consider how you would want to be approached for assistance and follow the Golden Rule: “Do to others as you would have them do to you” (Luke 6:31).

Offer assistance discreetly and with humility: “Be careful not to practice your righteousness in front of others to be seen by them. If you do, you will have no reward from your Father in heaven. So, when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by others. Truly I tell you, they have received their reward in full. But when you give to the needy, do not let your left hand know what your right hand is doing” (Matthew 6:1–3).

Offer help not to seek praise from others, but as an opportunity to share the gospel: “Nor did we seek glory from men, either from you or from others, when we might have made demands as apostles of Christ. But we were gentle among you, just as a nursing mother cherishes her own children. So, affectionately longing for you, we were well pleased to impart to you not only the gospel of God, but also our own lives, because you had become dear to us” (1 Thessalonians 2:6–8).

Practical Ways to Assist Someone Financially with Gentleness

  • Pay a bill anonymously.
  • Send a check with a note that says, “The Lord instructed me to give this to you.”
  • Drop off a bag of groceries or a gift card to a grocery store.
  • Pay attention to their needs and purchase specific items to meet those needs.
  • Offer them an opportunity to do paid work for you, such as:
    • Yard work
    • Home repairs and maintenance
    • Errands and/or shopping
    • Housecleaning
    • Temporary work at your business (e.g., seasonal sales or extra labor for large jobs)
  • Contract work for your business (e.g., website design, bookkeeping, marketing, or janitorial services)

Conclusion:

Gentleness is more than just a soft-spoken demeanor; it is an intentional choice to treat others with dignity, compassion, and humility, especially when it comes to our financial dealings. Whether helping someone in need, forgiving a debt, or practicing patience in difficult financial situations, gentleness reflects Christ’s love and grace in practical ways. As we cultivate this fruit of the Spirit, we not only honor God, but we also create an environment of peace, trust, and healing in our relationships with others.

Ask God to open your eyes to those in need around you and pray for wisdom to meet those needs, as led by the Holy Spirit, with gentleness and a heart that reflects His love. Let gentleness guide you in your financial decisions and interactions, and watch how it transforms not only your heart but the lives of those around you. May we continue to be faithful stewards of the resources God has entrusted to us, using gentleness as a reflection of His love in all things.

Discussion Questions:

  1. How can you apply gentleness when helping someone with a financial need, especially if their situation is a result of poor financial decisions? How can you balance compassion and wisdom in such situations?
  2. What are some ways gentleness can influence how you manage your own finances? For example, how might gentleness affect your approach to budgeting, saving, or giving?
  3. In what areas of your life do you struggle to show gentleness in your financial interactions, whether it’s forgiving a debt, giving to others, or paying your bills on time? How can you ask God for help in those areas?
  4. Think about a time when you needed financial help or guidance. How did the gentleness or lack thereof from others impact your relationship with them? How can you practice gentleness in your own financial dealings to build trust and understanding?

Comparing Your Financial Ratios to Industry Standards

Business woman studying her business's financial ratios

Knowing your financial ratios is critical to managing your small business successfully. If you are applying for a business loan, the lender will want to see that your net operating income is more than sufficient to cover your loan payments. In fact, most lenders expect net operating income to be approximately three times the required loan payment. This standard holds true across the industry.

However, other ratios can vary greatly depending on the type of business you have. For example, inventory turnover should be much faster in a restaurant or grocery store compared to a retail clothing or appliance store. Grocery stores often have low profit margins per item but sell a large volume of products, while appliance stores sell fewer items but need a higher margin per sale to stay profitable.

Fortunately, there are several sources of standard industry data that can help you assess how your business compares to industry averages. These resources include:

  • IBISWorld: Offers comprehensive industry analysis, financial statistics, and industry trends. It’s a fee-based service, but you may be able to access it for free through a university or public library. Many Small Business Development Centers (SBDCs) use these reports in client consultations.
  • ReadyRatios: This financial software allows business owners to input their financial statements and automatically calculate key financial ratios. It also compares your business’s performance to industry benchmarks. ReadyRatios offers both free and fee-based versions depending on your needs.
  • Statista: A platform providing a wide range of data, including industry-standard ratios, market trends, and consumer behavior. It also has both free and premium options.

Other sources include:

  • Trade Associations
  • U.S. Census Bureau
  • Bureau of Labor Statistics
  • Market Research Firms

Key Ratios to Compare

There are several important financial ratios you can use to assess your business’s performance. Here are a few to consider:

Revenue Growth

If your industry is experiencing strong revenue growth but your business is lagging behind, it’s important to investigate why. Ask yourself:

  • Are new competitors eating into your market share?
  • Have you cut back on marketing and advertising?
  • Are you failing to provide an exceptional customer experience?

Profit Margin

Before starting your business, you should research the industry’s standard profit margin and compare it to your projected margins. If you’re projecting a profit margin much higher than industry standards, you’ll want to carefully review your assumptions about costs and operating expenses. If your business is already running and your profit margin is too low, consider:

  • Are your costs rising faster than you’re able to increase prices?
  • Are you failing to collect receivables in a timely manner?
  • Have revenues fallen below the point where they can cover fixed costs?
  • Has the quality of your product declined, leading to returns and waste?

Cost of Goods Sold (COGS)

The COGS ratio varies widely by industry, and yours should align with the industry’s average. If it’s not, investigate the following:

  • Are your prices too high, leading to reduced sales?
  • Is your markup too low, cutting into profits unnecessarily?
  • Are you offering deep discounts to move inventory, suggesting a misalignment with customer demand?
  • Are you over-ordering perishable items, resulting in waste?

Inventory Turnover Ratio

Your inventory turnover ratio indicates how quickly you’re selling and replacing inventory. If your ratio is higher than the industry average, it may indicate that you’re turning over inventory too quickly, which could lead to lost sales on high-demand items. On the other hand, a lower turnover ratio could mean that you’re ordering too much or the wrong items. Striking the right balance between inventory levels and demand is key to boosting sales and minimizing excess investment.

Interpreting Industry Benchmarks

These are just a few of the key financial ratios you can compare. It’s important to remember that deviating from the industry standard doesn’t necessarily indicate a problem, but it should prompt further investigation. You may find that your business is more efficient than average, or you may uncover areas for improvement that could help you optimize operations and boost profitability.

Conclusion: Understanding Your Ratios in Context

By comparing your financial ratios to industry standards, you can gain valuable insights into how your business is performing. Regularly reviewing these ratios will help you stay on track, identify potential issues early, and make informed decisions about the future of your business. Industry benchmarks serve as a useful tool, but remember that each business is unique, and your financial strategy should reflect your individual goals and circumstances.

If you need help analyzing your business’s financial ratios or understanding how they compare to industry standards, feel free to reach out. I’m here to help you navigate your financial strategy and grow your business confidently! You can email me @ susan.ball5@aol.com

The Reward of Faithfulness: Trusting God with Your Money

Faithfulness is the seventh fruit of the Spirit. It’s about being reliable, trustworthy, and true to our word. God is faithful to meet our needs when we trust Him, and He expects us to be faithful in return. As Christians, we should be known for our faithfulness—whether in keeping promises, being punctual, or fulfilling our commitments.

When it comes to our finances, we demonstrate faithfulness by using the resources God has entrusted to us in ways that align with His purposes. This includes faithfully supporting the church, helping those in need, and fulfilling our financial obligations.

Faithfulness in Tithing

One of the clearest ways we show financial faithfulness is through tithing. God expects us to give a portion of what He has blessed us with to support the ministry of the local church. This principle is outlined in Malachi 3:8-12, where God says:

“Will a mere mortal rob God? Yet you rob me. But you ask, ‘How are we robbing you?’ In tithes and offerings. You are under a curse—your whole nation—because you are robbing me. Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it. I will prevent pests from devouring your crops, and the vines in your fields will not drop their fruit before it is ripe,” said the Lord Almighty. “Then all the nations will call you blessed, for yours will be a delightful land,” says the Lord Almighty.

In this passage, God makes it clear that withholding our tithes is considered robbery, and the result is lack and hardship. But when we are faithful to bring our tithes into the storehouse, God promises to pour out blessings beyond what we can imagine. Not only that, but He will protect our resources from destruction.

Tithing supports the work of the church, and this was a practice established long ago. In Leviticus 18:21, Moses commanded the Israelites to bring their tithes to support the Levites, who were responsible for the temple work. This principle is reaffirmed in the New Testament in Hebrews 7:5, where it says, “those who are of the sons of Levi…have a commandment to receive tithes from the people according to the law.”

Faithfulness in Doing Charitable Deeds

In addition to tithing, God also calls us to use our resources to help those in need. Throughout Scripture, God commands His people to care for widows, orphans, and the poor. In Deuteronomy 15:11, Moses said:

“There will always be poor people in the land. Therefore, I command you to be openhanded toward your fellow Israelites who are poor and needy in your land.”

This command is echoed in Malachi 3:5, where God promises judgment on those who neglect the poor, widows, and orphans, placing such neglect alongside sins like sorcery and adultery. In the New Testament, James reinforces the importance of caring for those in need when he writes, “Pure and undefiled religion before God and the Father is this: to visit orphans and widows in their trouble, and to keep oneself unspotted from the world” (James 1:27).

Being faithful in our finances means using what we’ve been given to care for those less fortunate, following God’s heart for the needy and reflecting His love in tangible ways.

Faithfulness in Fulfilling Obligations

God also expects us to be faithful in fulfilling our financial obligations. This includes paying our debts, taxes, and wages owed to those who work for us. Scripture is clear about this in several places. Psalm 37:21 warns:

“The wicked borrows and does not repay.”

As Christians, we are called to be trustworthy in all our dealings, including financial ones. Romans 13:7 tells us to “Render therefore to all their due: taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor.”

We’re also reminded in both the Old and New Testaments to pay those who work for us in a timely manner. Leviticus 19:13 commands:

“You shall not cheat your neighbor, nor rob him. The wages of him who is hired shall not remain with you all night until morning.”

James 5:4 echoes this principle:

“Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord.”

Being faithful in paying what we owe is not just a matter of legal obligation—it’s a reflection of our integrity and our trust in God’s provision.

Promised Rewards for Faithfulness

Jesus teaches that those who are faithful with what they’ve been given will be rewarded. In Luke 19, He tells a parable about a master who entrusts ten servants with minas (a form of money) and asks them to do business with it while He is away. When the master returns, He rewards the servants based on how they handled the money entrusted to them. The one who earned the greatest return is praised:

“Well done, good servant; because you have been faithful in a very little, you shall have authority over ten cities” (Luke 19:17).

When we are faithful with our finances, not only will we be blessed in this life, but God will give us greater opportunities to serve Him and further His kingdom. Financial faithfulness leads to spiritual growth and greater responsibility in God’s work.

Conclusion

Faithfulness in our finances is a reflection of our trust in God and our commitment to His purposes. Whether it’s through tithing, helping those in need, or fulfilling our obligations, God calls us to be faithful stewards of the resources He has entrusted to us. As we demonstrate faithfulness in our finances, we can trust that God will meet our needs and reward our obedience.

Discussion Questions:

  • How have you experienced God’s faithfulness in your finances? Have there been times when you’ve trusted Him with your finances, even in challenging circumstances?
  • What does faithfulness in tithing look like in your life? How can you practice faithful giving to your local church?
  • How can you be more intentional in using your resources to care for those in need?
  • Are there any financial obligations that you need to fulfill more faithfully? How can you prioritize those commitments?

Know Your Financial Ratios: The Key to Understanding Your Business’s Profitability

Understanding your financial statements is crucial to managing your small business effectively. However, it’s just as important to analyze these statements to assess how your business is performing. One powerful tool to do this is financial ratios. These ratios can help you measure your business’s financial health and compare it to others in your industry.

Here’s an overview of key financial ratios every business owner should understand and know how to calculate.

What Are Financial Ratios?

Financial ratios are calculations that help business owners evaluate their financial performance. They allow you to measure things like liquidity, profitability, and leverage—giving you a clearer picture of your business’s financial health.

Measures of Liquidity:

Liquidity refers to how easily assets can be converted into cash to cover short-term obligations. To maintain financial stability, it’s essential for a business to have sufficient liquidity.

Current Ratio: The current ratio measures a company’s ability to meet short-term liabilities using short-term assets.

Formula: Current Ratio = Current Assets / Current Liabilities

A ratio greater than 1 indicates that the company can pay its short-term obligations using its assets. A higher ratio means more liquidity.

Quick Ratio: The quick ratio is another liquidity measure, but it excludes inventory from current assets, recognizing that inventory may take longer to sell and convert into cash.

Formula: Quick Ratio = (Current Assets – Inventory) / Current Liabilities

Inventory Turnover Ratio: This ratio measures how often a company sells and replaces its inventory during a period. A higher turnover suggests that inventory is being sold quickly. Inventory turnover ratios vary greatly from one industry to another. Businesses whose inventory is perishable must turn over their inventory in a few days, whereas businesses whose products have long lives turn over their inventory just a few times a year.

Formula: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Measures of Profitability:

Gross Profit: Gross profit represents the revenue that remains after subtracting the cost of goods sold (COGS). It’s essential for understanding how much revenue is available to cover operating expenses.

Formula: Gross Profit = Revenues – Cost of Goods Sold

Gross Profit Margin: The gross profit margin shows the percentage of revenue available to cover operating expenses.

Formula: Gross Profit Margin = (Revenues – COGS) / Revenues

A higher gross profit margin indicates a more efficient business model.

Net Profit: Net profit is the remaining revenue after subtracting all expenses, taxes, and interest. It represents the business’s overall profitability.

Formula: Net Profit = Revenues – COGS – All Business Expenses

Net Profit Margin: The net profit margin calculates what percentage of revenue remains as profit after all expenses are paid.

Formula: Net Profit Margin = Net Profit / Revenues

Operating Profit (EBITDA): After taking out the cost of goods sold and paying all operating expenses you are left with the Operating Profit. It measures the funds available to meet obligations, such as loan payments and taxes. It’s also known as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Formula: Operating Profit = EBITDA = Gross Profit – Operating Expenses

Return on Assets (ROA): The return on assets ratio measures how efficiently a business is using its assets to generate profit.

Formula: Return on Assets = Net Profit / Total Assets

Return on Equity (ROE): The return on equity ratio shows how much profit a company generates with the money invested by its shareholders.

Formula: Return on Equity (ROE) = Net Profit / Shareholder’s Equity

Leverage Ratios:

Leverage ratios indicate the degree to which a company is financing its operations through debt, which is vital for evaluating financial risk.

Debt-to-Equity Ratio: The debt-to-equity ratio compares a company’s total debt to its total equity.

Formula: Debt-to-Equity Ratio = Total Debt / Total Equity

Interest Coverage Ratio: The interest coverage ratio measures a company’s ability to meet interest payments.

Formula: Interest Coverage Ratio = EBIT / Interest Expense

Debt Service Coverage Ratio: This ratio measures a business’s ability to cover its debt obligations (principal and interest payments).

Formula: Debt Service Coverage Ratio = Net Operating Income / (Principal + Interest Due)

A ratio of 2.5 to 3.0 or higher is often seen as a healthy benchmark by lenders.

How to Interpret Financial Ratios

Now that you understand the basic financial ratios, it’s essential to interpret what they mean. Some ratios, such as the debt service coverage ratio, are fairly standard across industries. Other ratios, such as inventory turnover or profit margins, can vary significantly between different industries.

In our next blog post, we’ll dive deeper into how to access industry data to benchmark your ratios and what variances in your ratios mean for your business’s performance.

Conclusion: Why Financial Ratios Matter

Understanding and calculating financial ratios is crucial for small business owners who want to assess their financial health. These ratios provide valuable insights into liquidity, profitability, and financial risk. By regularly tracking these ratios, you can make informed decisions about your business’s financial strategy and growth.

If you have any questions about how to calculate or interpret your business’s financial ratios, feel free to reach out in the comments below or email me at susan.ball5@aol.com. I’m here to help you manage your business finances with confidence!

Goodness and Money: How Practicing Goodness Can Transform Your Finances

Goodness is the next fruit of the Spirit. While it includes acts of kindness, goodness goes beyond that—it encompasses honesty, fairness, and always choosing to do the right thing.

We display goodness when we use our financial resources to demonstrate God’s goodness and direct others toward Him. To embody goodness, we must first acknowledge that only God is truly good, and that all goodness flows from Him.

God is Good, and He Provides for Us by His Goodness

God is inherently good, and He blesses His children with good things. Recognizing God’s goodness in our lives is key to understanding how we should use our finances. We must thank Him daily for His faithfulness. Psalm 34:8 reminds us:

“Oh, taste and see that the Lord is good; blessed is the man who trusts in Him!”

1 Chronicles 16:34 echoes this truth:

“Give thanks to the LORD, for He is good; His love endures forever.”

Psalm 107 starts with an invitation to give thanks for God’s goodness:

“Oh, give thanks to the Lord, for He is good! For His mercy endures forever.” (verse 1)

The chapter goes on to highlight how God demonstrates His goodness: He redeems us, protects us, provides for us, heals us, and lifts us out of distress. The psalmist concludes with the call to reflect on God’s loving deeds:

“Let the one who is wise heed these things and ponder the loving deeds of the Lord.” (Psalm 107:43)

Jeremiah 33:9 further illustrates how God’s provision is rooted in His goodness:

“Then it shall be to Me a name of joy, a praise, and an honor before all nations of the earth, who shall hear all the good that I do to them; they shall fear and tremble for all the goodness and all the prosperity that I provide for it.”

God Is Pleased When We Do Good

We honor God when we do good for others, especially by sharing the blessings He has given us. Hebrews 13:16 tells us:

“And do not forget to do good and to share with others, for with such sacrifices God is pleased.”

Demonstrating goodness points others to God’s love. 1 John 3:17-18 challenges us:

“But whoever has this world’s goods, and sees his brother in need, and shuts up his heart from him, how does the love of God abide in him? My little children, let us not love in word or tongue, but in deed and in truth.”

Loving in deed means that we share what God has entrusted to us, including our finances. Failing to do so, particularly when it comes to caring for those in need, is a missed opportunity to reflect God’s love. James 4:17 says:

“Anyone who knows the good he ought to do and doesn’t do it, sins.”

Proverbs 21:13 offers a stern warning:

“Whoever shuts their ears to the cry of the poor will also cry out and not be answered.”

Being Good Points Others to God

Jesus taught His followers in Matthew 5:16:

“Let your light so shine before men, that they may see your good works and glorify your Father in heaven.”

We let our light shine when we share our resources and show goodness to others. Paul also encouraged the Galatians to persist in doing good:

“Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up. Therefore, as we have opportunity, let us do good to all people, especially to those who belong to the family of believers.” (Galatians 6:9-10)

The harvest we reap by doing good will be souls added to God’s kingdom—a true treasure in Heaven.

Conclusion

God has been incredibly good to us, and He expects us to reflect His goodness by doing good for others, especially when it involves sharing our financial resources. By following God’s example, we can trust that He will meet all our needs.

Discussion Questions:

  1. Recognizing God’s Goodness:
    How have you experienced God’s goodness in your life recently? How does recognizing His goodness impact the way you manage your finances?
  2. The Role of Finances in Showing Goodness:
    In what ways can our financial decisions reflect God’s goodness to others? Can you think of a time when you were able to use your resources to bless someone else?
  3. Sharing and Generosity:
    1 John 3:17-18 challenges us to love in deed and truth. What are some practical ways we can demonstrate God’s love through our financial resources, particularly in times of need?
  4. The Connection Between Goodness and Obedience:
    James 4:17 tells us that failing to do the good we know we should do is a sin. How does this verse challenge you to reconsider your approach to generosity and caring for others?
  5. God’s Provision and Trusting Him:
    Jeremiah 33:9 speaks about God’s goodness leading to prosperity. How does trusting in God’s provision influence your decisions about managing money and sharing with others?
  6. Persevering in Doing Good:
    Galatians 6:9-10 encourages us to continue doing good, especially for those in the faith. How do you stay motivated to keep doing good when you feel weary or discouraged, especially when it comes to financial giving?
  7. A Life That Points Others to God:
    Matthew 5:16 says we should let our good works shine before others to glorify God. How can we intentionally use our finances to point others to Christ, both within and outside the church community?
  8. Reflecting on Personal Action:
    As you reflect on your current financial situation, how can you align your use of money more closely with God’s goodness? Is there a specific change or action God is calling you to make?

Retiring the Penny

My father collected coins all his life. Some of these coins were put in folders or protective pockets, but many were stored in old jars. As a child, I liked to look through his many jars of coins for ones to add to my coin folders.  My maiden name is Whitman, and it was a source of pride that we always used Whitman coin folders for our collections. 

Today, I have several jars of Dad’s coins waiting to be rolled up and deposited in the bank or saved in coin folders. This picture shows two of these jars. I likely have thousands of pennies that Dad collected, and their sentimental value is worth much more than their actual value.

I’ve been thinking about pennies since President Trump announced that he would stop the production of pennies.  Some people fear that retiring the penny will cause prices to rise as businesses round prices up.  Others point out that it costs the U.S. $192 million per year to mint pennies at a price of nearly 4 cents per penny.  I wonder if the value of pennies will increase as they become rarer, so I did a bit of research.  Here’s what I found.

  • Officially, the U.S. does not have a coin called a penny.  Our one-cent coin is called the cent. The British have pennies, so our forefathers did not want to name a coin “penny.”
  • It cost 3.69 cents to mint a one-cent coin in 2024.
  • The cent was first minted in 1793; the Lincoln cent was introduced in 1909.
  • Eleven other coins and currency have been retired, including the half-cent coin, the two-cent coin, and the twenty-cent coin.
  • The penny will not go away anytime soon, as there are approximately 250 billion in circulation.
  • Prices will not necessarily round to the nearest 5 cents.  Most payments are made by check, electronic funds transfers, and payments apps, which will still be able to accommodate rounding to two decimal places.
  • Pennies are not likely to increase much in value. So, my 2,000 (estimated) pennies will still be worth about $20.00

Do you think it’s a good idea to retire the penny? Please feel free to comment and share your thoughts.

This article was published in my quarterly newsletter, along with articles on Scriptures that help you feel secure in times of financial stress, reducing spending by making it painful, and valuable Beanie Babies. If you would like to receive my quarterly newsletter on Honoring God with Your Money, please complete the form on the Contact page or send me an email to susan.ball5@aol.com

The Power of Kindness: Transforming Your Finances and Relationships

Kindness is the fifth fruit of the Spirit. A kind person is friendly, generous, and compassionate. The root word “kin” in kindness reminds us to treat others as family. As God’s people, we’re called to show kindness, especially by helping those less fortunate. Kindness can be as simple as offering a kind word or as significant as giving one’s resources, time, and energy to improve the situation of another.

True kindness eases others’ burdens and points them to Christ. As we grow closer to the Lord and allow the fruit of the Spirit to develop within us, the Holy Spirit empowers us to demonstrate kindness.

Kindness Cannot Co-Exist with Unforgiveness

Having the right attitude is essential when practicing kindness—particularly when it comes to sharing our financial resources. If we harbor animosity or unforgiveness in our hearts toward someone, it will be difficult to open our hearts (and our pocketbooks) to help them when the Holy Spirit nudges us to do so.

The Bible teaches us that in order to please God and cultivate kindness, we must rid our hearts of bitterness and unforgiveness. Ephesians 4:31-32 reminds us:
“Get rid of all bitterness, rage and anger, brawling and slander, along with every form of malice. Be kind and compassionate to one another, forgiving each other, just as in Christ God forgave you.”

Paul also emphasizes this in Colossians 3:12-13:

“Clothe yourselves with compassion, kindness, humility, gentleness and patience. Bear with each other and forgive whatever grievances you may have against one another. Forgive as the Lord forgave you.”

God Expects Us to Be Kind

In the Old Testament, God commanded His people to show kindness. He even withheld His favor when they failed to do so. In Isaiah, God expresses His displeasure when kindness is withheld, especially toward the poor and oppressed. Isaiah 58:6-7 states:

“Is not this the kind of fasting I have chosen: to loose the chains of injustice and untie the cords of the yoke, to set the oppressed free and break every yoke? Is it not to share your food with the hungry and to provide the poor wanderer with shelter—when you see the naked, to clothe them, and not to turn away from your own flesh and blood?”

Job also reminds us of the importance of kindness in relationships:
“Anyone who withholds kindness from a friend forsakes the fear of the Almighty” (Job 6:14).

Jesus taught that when we serve the least among us, we are serving Him (Matthew 25:31-46). The acts of kindness Jesus described involved sharing our possessions—food, water, clothing—with those in need. As God provides for us, He expects us to share those resources with others.

God Rewards Those Who Show Kindness

God blesses those who are kind and share their resources. Solomon wisely wrote, “A kind man benefits himself” (Proverbs 11:17), and “Whoever is kind to the poor lends to the Lord, and He will reward them for what they have done” (Proverbs 19:17).

When we are kind, we are building treasure in Heaven. This is especially true when we do so without making a spectacle of it. Jesus warned against doing good deeds for the sake of recognition, teaching His disciples:

“Take heed that you do not do your charitable deeds before men, to be seen by them. Otherwise, you have no reward from your Father in heaven. Therefore, when you do a charitable deed, do not sound a trumpet before you as the hypocrites do in the synagogues and in the streets, that they may have glory from men. Assuredly, I say to you, they have their reward. But when you do a charitable deed, do not let your left hand know what your right hand is doing” (Matthew 6:1-3).

When we show kindness to others, we honor God and demonstrate His love to those who are hurting. We should not show kindness to gain God’s favor or heavenly rewards, but when done in obedience to God’s commands and with the right attitude, God will reward our kindness.

A Reflective Question for Your Heart

As you reflect on your relationship with money and kindness, consider the following questions:

  • How has kindness played a role in your financial decisions?
  • Can you think of a time when showing kindness to someone changed their situation—or yours?

Take a moment to reflect and invite God to help you be more intentional with your kindness, especially in how you manage and share your resources. Remember, the kindest act you can do is to share the gospel of Jesus Christ, so that others can look forward to eternity in Heaven.

Know Your Financial Statements—The Personal Financial Statement

The Personal Financial Statement (PFS) is an important document that every business owner should understand. Unlike other financial statements, the PFS reflects the financial health of the business owner rather than the business itself. Many business owners mistakenly believe their personal financial situation is separate from their business’s financial health. However, that is not the case.

A business owner’s personal finances play a crucial role in determining whether a lender will approve a small business loan. Lenders review the PFS to assess if the borrower:

  1. Is managing their personal finances well
  2. Has cash to inject into the business
  3. Has collateral to support the loan

Moreover, landlords and franchisors often require business owners to demonstrate financial responsibility before entering into lease or franchise agreements. Additionally, a PFS is necessary for certain SBA certifications and for securing SBA-backed loans.

Many business owners struggle with understanding how to complete the PFS. To help, I’ll guide you through the process, using the SBA’s Form 413 as the reference. While each bank may have its own version, most will accept the SBA version.

Guidelines for Completing the Personal Financial Statement

Assets:

  • Cash on Hand and in Banks: Total cash on hand and in your bank checking accounts.
  • Savings Accounts: Total of savings accounts, including CDs and money market accounts.
  • Retirement Accounts (IRAs, etc.): Total all retirement accounts. Though this money cannot be used as collateral, it’s still an important asset.
  • Accounts and Notes Receivable: Money owed to you, such as tax refunds, security deposits, or maturing CDs.
  • Life Insurance: Include only the cash surrender value of life insurance policies (the amount you’d receive if you cancel the policy, after administrative costs).
  • Stocks, Bonds, Real Estate, Automobiles, and Other Personal Property: List at current market values.
  • Other Property and Assets: Includes boats, trailers, collectibles, and jewelry.
  • Business Ownership: If you own a business, include its value, calculated by summing cash, equipment, and inventory. Enter this as “Other Assets.”

Liabilities:

  • Accounts Payable and Notes Payable: Includes unpaid bills, outstanding credit card balances, and bank loans (excluding mortgages, student loans, and auto loans).
  • Auto and Installment Loans: Include the total debt and the monthly payment for auto loans, student loans, or other installment loans.
  • Life Insurance Loans: If applicable, list any loans against life insurance policies.
  • Mortgage Liabilities: Include the total debt secured by any real estate, including first and second mortgages and home equity loans.
  • Unpaid Taxes: List any unpaid income tax, property taxes, and personal property taxes.
  • Other Liabilities: Include private loans from friends or family, legal judgments, and unpaid child support or alimony.

Net Worth: Net Worth = Total Assets – Total Liabilities

Additional Sections to Complete

Once you’ve filled in the basic table, additional details about your assets and liabilities are required in the sections below.

Section 1: Income

  • Salary: Include wages or salaries you regularly pay yourself from the business and any other employment.
  • Investment and Real Estate Income: Provide details of income from investments or properties.
  • Other Income: This might include disability income, foster care payments, and retirement income (but not alimony or child support).
  • Contingent Liabilities: Include any loans for which you co-signed, or set-aside funds for contingencies like lawsuits or IRS audits.

Section 2: Loans and Credit Cards

Provide details on all outstanding bank loans, credit card balances, student loans, auto loans, and personal loans.

Section 3: Stocks and Bonds

Provide details on stocks and bonds owned, including the number of shares and their current values.

Section 4: Real Estate

Include all properties owned—both free and clear, and those with mortgages. Use online sources like Zillow to estimate current property values.

Section 5: Other Assets

Describe the assets listed in Accounts Receivable, Other Personal Property, and Other Assets. Include the asset and its value, e.g., “2024 tax refund expected: $1,450” or “2018 fishing boat: $9,000.”

Section 6: Taxes Owed

Provide details on any unpaid taxes owed to the federal, state, or local government. If you’re on a payment plan, include the balance and payment terms.

Section 7: Other Liabilities

Provide details on any other liabilities not already covered in the previous sections.

Section 8: Life Insurance Policies

List the face value of your life insurance policies and the cash value you would receive if you cashed them out. If you’ve borrowed against any policies, include those details here as well.

Be sure to sign and date the form, and include your Social Security Number. If you are married, your spouse must also sign and date the form.

When lenders, landlords, or franchisors review your PFS, they’re evaluating whether you manage your personal finances responsibly, if you’ve taken on too much debt, and whether you can meet your financial obligations. Managing your personal finances well is critical, not only for your own peace of mind but also to demonstrate your ability to manage your business effectively.

Conclusion

The Personal Financial Statement is a key tool in securing financing for your business and demonstrating your financial responsibility to potential partners. By completing it accurately, you’ll be better prepared for any financial assessments that come your way. If you have any questions about how to complete your PFS or need further assistance, feel free to drop a comment below or email me at susan.ball5@aol.com! I’m happy to help you navigate this important aspect of your business finances.