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Titanium Life Podcast Episode 78: Conduct a Year-End Business Financial Analysis - Part 2


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I cover the second half of my strategy for conducting a year-end financial analysis that I use for all of my businesses.

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Titanium Life Podcast Episode 78: Conduct a Year-End Business Financial Analysis - Part 2

  1. 1. Episode 78 • This is a continuation of the information covered in Episode 77. • It gets right into the costs of goods sold section of the Profit & Loss Statement. Business Coaching Inquiries: (844) 884-8264 | ConductAYear-End BusinessFinancialAnalysis Part 2
  2. 2. vVP&L - Cost of Goods Sold Business Coaching Inquiries: (844) 884-8264 | • Rent, utilities, and equipment investments do NOT go under cost of goods sold. • Only direct costs go under this section. • This includes anything that goes into producing your products or services. • Your cost of goods sold will rise as your sales volume rises. • Looking at this section makes you look at gross profit. • This is the money you make before you pay overhead.
  3. 3. vVP&L - Expenses/Overhead Business Coaching Inquiries: (844) 884-8264 | • All expenses not directly related to producing goods fall under “overhead”. • Rent, utilities, and payroll all fall in this section. • Too much overhead is what kills a lot of companies.
  4. 4. vVLooking at the P&L as a Whole Business Coaching Inquiries: (844) 884-8264 | • When looking at the total revenue section, you’re asking: • What line items are making the most money? • What’s trending up or down? • When looking at the cost of goods sold, you’re asking: • Where am I spending the most money? • What are my margins like on each line item? • When looking at overhead, you’re asking: • How much am I spending to keep this business alive? • Where can I make cuts?
  5. 5. vV Using the P&L to Plan for Next Year Business Coaching Inquiries: (844) 884-8264 | • Most people only plan from their bottom line. • If they made $200,000 last year, • They want to make $300,000 this year. • This type of planning is useless. • It’s better to plan from the performance of the line items in your P&L statement. • This allows you to see the path towards your revenue goals.
  6. 6. vVThe Balance Sheet Business Coaching Inquiries: (844) 884-8264 | • Your balance sheet shows you what you have spent money on. • It also shows you who owes you money. • Accounts receivable in the balance sheet section is what people owe you. • Accounts payable is what you owe other people. • Keeping your balance sheet balanced comes down to knowing where the cash goes. • The balance sheet is important when looking at big-picture decisions.
  7. 7. vVStatement of Cash Flows Business Coaching Inquiries: (844) 884-8264 | • The statement of cash flows shows how much money came in, • As well as how much money went out.
  8. 8. vVPutting Everything Together Business Coaching Inquiries: (844) 884-8264 | • Understanding how each section relates to the other is crucial. • Look at the P&L statement, balance sheet, and statement of cash flows each month. • Make critical decisions for the future based on this analysis. • Schedule a session with a business coach to help with your year-end financial analysis.
  9. 9. BUSINESS DOWN TO A SCIENCE Listen & subscribe using your favorite podcast app on iTunes, Android or PC: ATruly Life-Changing Force for Business Owners Business | Health | Wealth | Relationships | Happiness Business Coaching Inquiries: (844) 884-8264 |