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Financial Management Pres Nhfa31009
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Financial Management Pres Nhfa31009

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Here is a financial management presentation for a seminar that I delivered for a Managers Workshop in Denver Colorado in March 2009.

Here is a financial management presentation for a seminar that I delivered for a Managers Workshop in Denver Colorado in March 2009.

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  • 1. Financial Management
  • 2. Why? They are your score card! n n Without them you don’t know whether you are winning or loosing n Their accuracy is critical n You NEED to know how they work, how to read them, how to verify their integrity, and what to do afterwards to improve n Every month – without fail!
  • 3. Main statements are: P&L (Profit and Loss) n n Balance Sheet n Cash Flow
  • 4. P&L PROFIT Demo Company Forecast Statement of Profit & Loss For the Years Ending December 31, 2008 to 2011 Actual 2008 2009 2010 2011 Sales $7,424,337 100.0% $8,983,448 100.0% $11,229,310 100.0% $12,913,706 100.0% Cost of Sales 4,534,711 61.1 5,300,234 59.0 6,625,293 59.0 7,231,675 56.0 Gross Margin 2,889,626 38.9 3,683,214 41.0 4,604,017 41.0 5,682,031 44.0 Cash Discounts, Rebates 39,185 0.5 17,967 0.2 22,459 0.2 25,827 0.2 Gross Realized Margin 2,928,811 39.4 3,701,180 41.2 4,626,476 41.2 5,707,858 44.2 Operating Expenses Administrative 945,449 12.7 992,721 11.1 1,042,358 9.3 1,094,475 8.5 Occupancy 559,959 7.5 643,953 7.2 656,832 5.8 669,969 5.2 Advertising 285,809 3.8 601,891 6.7 673,759 6.0 774,822 6.0 Selling 397,923 5.4 494,090 5.5 617,612 5.5 710,254 5.5 Customer Service 0 0.0 0 0.0 56,147 0.5 64,569 0.5 Warehouse & Delivery 232,261 3.1 467,139 5.2 617,612 5.5 710,254 5.5 Total Operating Expenses 2,421,401 32.6 3,199,794 35.6 3,664,319 32.6 4,024,343 31.2 Net Operating Profit 507,410 6.8 501,386 5.6 962,157 8.6 1,683,516 13.0 Other Income 25,000 0.3 0 0.0 0 0.0 0 0.0 Interest Expense 0 0.0 -6,041 -0.1 -6,041 -0.1 -6,041 0.0 Other Expenses (Finance) -210,000 -2.8 -179,669 -2.0 -224,586 -2.0 -258,274 -2.0 Net Earnings $322,410 4.3 $315,677 3.5 $731,530 6.5 $1,419,201 11.0 Before Shareholder Distributions
  • 5. Balance Sheet Demo Company Forecast Balance Sheet As of December 31, 2008 to 2011 Actual 2008 2009 2010 2011 Current As ets s : Cas h on hand & in bank s $453,457 $483,769 $1,483,197 $2,696,673 Ac c ounts Rec eivable 55,000 66,550 83,188 95,666 Inventory 1,499,855 1,886,524 1,684,396 1,937,056 Prepaid E x penses 25,000 25,000 25,000 25,000 2,033,312 2,461,843 3,275,781 4,754,394 Total Current As sets 137,306 137,306 187,306 237,306 Net Fixed As ets s 0 0 0 0 Other Assets $2,170,618 $2,599,149 $3,463,087 $4,991,700 Total As ets s Current Liabilities Ac c ounts P ay able $224,625 $282,979 $336,879 $387,411 Salaries P ay able 0 0 0 0 Cus tom er Depos its 250,000 302,500 378,125 434,844 Taxes Pay able 9,528 11,529 14,411 16,573 Notes P ayable 100,679 100,679 100,679 100,679 584,832 697,686 830,094 939,507 Total Current Liabilities Long Term Liabilities Due to Related P arties 100,085 100,085 100,085 100,085 Long Term Loans P ayable 0 0 0 0 100,085 100,085 100,085 100,085 Total Long Term Liabilities Net Worth: Com mon Stoc k 317,917 317,917 317,917 317,917 Capital S urplus 0 0 0 0 Less Owner Draws 0 0 0 0 Retained E arnings 845,374 1,167,784 1,483,461 2,214,991 Net E arnings for the Y ear 322,410 315,677 731,530 1,419,201 Total Net W orth 1,485,701 1,801,378 2,532,908 3,952,108 Total Liabilities & Net W orth $2,170,618 $2,599,149 $3,463,087 $4,991,700
  • 6. Cash flow Demo Company Cash Flow As of December 31, 2008 to 2011 2009 2010 2011 Cash Beginning Balance $453,457 $483,769 $1,483,197 Net Earnings for the Year 315,677 $731,530 $1,419,201 Plus : Depreciation expense 0 0 0 Total from Operations 315,677 731,530 1,419,201 Other Sources (Uses) of Funds Accounts Receiv able -11,550 -16,638 -12,478 Inventory -386,669 202,128 -252,659 Prepaid Expenses 0 0 0 Fixed Asset Purchases 0 -50,000 -50,000 Other Assets 0 0 0 Accounts Payable 58,354 53,901 50,532 Salaries Payable 0 0 0 Customer Deposits 52,500 75,625 56,719 Taxes Payable 2,001 2,882 2,162 Notes Payable 0 0 0 Reduction in Due to Related Parties 0 0 0 Reduction in Long Term Liabilities 0 0 0 Owner Draws 0 0 0 Total Source (Use) of Funds -285,365 267,898 -205,725 Net Increase (Decrease) in Cash 30,312 999,428 1,213,475 Cash Ending Balance $483,769 $1,483,197 $2,696,673
  • 7. How do you verify accuracy? Check primary BS account n with source data ¨ Cash ¨ AR ¨ Inv ¨ AP ¨ Deposits ¨ Loans Do they match? n
  • 8. How to use the NHFA Performance Report Study the main parts of the report n n Compare your company against the ratios
  • 9. Evaluate Balance Sheet Performance? Key Balance Sheet Indicators or n Metrics ¨ Quick Ratio ¨ Current Ratio ¨ AP / Inventory
  • 10. Evaluate P & L Performance? Key P & L Indicators or Metrics n ¨ GM % ¨ Admin % ¨ Occupancy % ¨ Advertising % ¨ Selling % ¨ Warehouse and Delivery % ¨ Total Operating income % ¨ Next income % ¨ Total Payroll separated out of dept…
  • 11. Evaluate Cash Flow Key Cash Flow indicators or n Metrics ¨ What is adding to cash? Why? ¨ What is reducing cash? Why? ¨ GMROI ¨ Inventory to Sales
  • 12. Group Exercise Break up into 4 groups n Name your company n Discuss the data handed out n Note your strengths, weaknesses and n opportunities Highlight as many recommendations n and improvement actions as you can Have Fun! n After the break: each company will n report and we will all vote on the winner