Book Report
Part 1) Summary of the Principles:
a. Any company has to have a goal to achieve in order to survive the competition, and to
generating demand (Money).
b. Theory of constraints: the limitation of the organization in order to achieve its goals. And
how to identify them using the Effect-Cause-Effect method(Ch3-4)
c. Net Profit: (Income –Expense) Profit gained from selling products.(Ch6)
d. Simultaneously having a 1) cash flow that generated by the company operational activity.
2) Return on investment (ROI), can be achieved by dividing net profit by total assets.
(Ch6)
e. Throughput: the rate at which the organization generates money from, through sales.
(Ch8)
f. Inventory: the money that has been invested in by purchasing things that the organization
intends to sell.(Ch8)
