The reinterpretation of parable of talents

Every generation needs a revolution - an entrepreneurial revolution

One of our tasks on earth is to invest, to make the world grow   One of the greatest sin is being indolent.   We should work harder.

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HE “FIVE TALENTS PRINCIPLE”:

How a 2,000-Year-Old Lesson Reveals the #1 Rule of Growth in Business

In Matthew 25, Jesus told a story that might be the most important business lesson ever recorded.

A master was leaving on a long journey.

Before he left, he entrusted three of his servants with resources.

One received five talents of silver.

Another received two talents.

The last received one talent.

A talent was not a coin.

It was a lifetime’s worth of wages…a massive investment.

The master expected them to do something with it.

The servant with five talents went immediately to work.

He invested.

He traded.

He multiplied.

He turned five into ten.

The servant with two did the same.

He doubled what he had.

But the servant with one talent?

He dug a hole and buried it in the ground.

No action.

No risk.

No effort.

No return.

Business is about ROI, making seeds grow to bear fruits

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
April 9, 2017

1.  The basic equation for any investment in business is ROI - return on investments, return on capital. That is why we have the Dupont Formula

             GP/Sales   x   Sales/Total Assets   x     Total Assets/Stockholders Equity

              (Patong)               (Paikot)                         (Laway)

              Margin                  Turn over                     Leveraging

            When we cancel sales, and total assets, we are left with GP/SHE  which is the formula
            for ROI (we have to fail an MBA student in a panel defense, who cant have the correct
            formula for ROI)




               Our SEC requires Du Pont Analysis:

     1.1 To have ROI it is thus important to have sales, and asset turn over

          Margin (patong refers to efficiency) cost reduction.   You cant have  margin, if the basic business model is wrong, ie sales - cost = GP.  No matter how high your sales is, if your are selling less than your cost, you can never have patong.  It is the goal of every business thus to:

          Increase sales (through marketing and sales efforts)

          Reduce expenses, through efficiency, and canvassing lower cost of inputs

   1.2 Paikot

        Your working capital must be turned around.  It must produce sales several times over.  If it only turns one round, or less than that you cant expect ROI

       How do you increase turn over?

      1.  By having more cash sales  (how do you do this?  By offering cash discounts)

      2.  By having shorter collection period

      3.  By having dedicated collectors

    LEVERAGE (Laway)

  1.3  As much as possible, you cant spend 100% of your equity in your business.  You must employ OPM (other peoples money) or borrow.  Many top execs or industry leader, disdain using their own money.    May I call this the Meralco or Tony Garcia (of Philchem) formula.   Meralco was bought by the Lopez after the end of Laurel Langley agreement from GTU using the cash flow from operations to pay off the installment on the balance.  The cash flow from operations paid the equity.   the IPO paid off the loan for the D/P.   Tony Garcia showed me how to do it, when he bought a school using practically nothing of the money of the investor

    This is only possible if you recognize the risk, ie that the business would be profitable enough, generate the cash flow  to meet the agreed repayment period.  I had several deals early on when we had terms, and the cash flow from the business sales paid off the balance.  You must be decisive enough and bold to generate cash when the payment time comes.   During high interest regime, we cant have much of 1.3

The biblical stories and parables support ROI