2. WORKSHOP OBJECTIVES ?
Who are - finance person – ?
Is accounts & finance different ? & various roles in finance ?
Working capital management –how can every member contribute ?
Capital cost management - how can every member better contribute ?
Cost monetoring – how can every member contribute to better cash profit ?
Budgeting – how build strong foundation for business growth ?
Return on investment - how can every member contribute for growth ?
Ratio analysis – how analysis by team can help organization grow ?
Bench marking - against own previous achieved numbers- how matters ?
Mis - financial numbers – how most helpful for - management ?
6. Decisions impact
Bottom line ?
Lets take departments wise
example –sales/HR /Purchase
/Accounts/Admin – Thousands of
examples .
7. Now I re-ask ,
Are You a finance
person ?
YES OR NO ?
8. Dangers- Not having Financial
Knowledge ?
Face challenge for taking financial decision.
Not fully engaged .
Over reliance on others .
Lack of right questions .
Non active participation in Management & other meetings .
Try to hide behind others .
May impact our growth in professional life .
9. Major concerns ?
What to look out for and keep in mind!
Planning, Problem-Solving and Decision Making
What do businesses look for?
Know what the numbers mean in compliance and
operational context
Accounting terminologies PAT/EBIT /PBT & Ratios-
DSCR/CR/LR/INVENTORY TURNOVER .
No appropriate Data Points and Backups as necessary
Strategic Proposals How finance plays a role
Capital Investment: How finance plays a role
10. Finance terms –
Pbit /ebit
Pat
Pbt
Gross profit
Net profit
Cash profit
Working capital
Positive & negative w capital
11. –Then how strong i am in basic finance fundamentals ? to :
Contribute best for my company growth .
To earn more & more promotions .
Higher & higher salaries .
Better manage /invest my earned saved salaries .
Become financially free in my personal life & successful .
12. IS ACCOUNTS & FINANCE
DIFFERENT ?.YES
Accounting is recording –responsibility - accounts department .
Finance –responsibility -all departments.
Financial accounting –for external stake holders
Management accounting –for internal stake holders.-Mis –all team
our role here .
14. NORMAL COMPANY GOALS ?
.1-reduce costs
2-improve cash flow
3-increase profitability
4-liquidity
5-build net worth .
6-goodwill
15. How I am contributing in my company
Cost & Financial Management ?
Cost of Materials / Manpower/Machines Cost of Funds -( Money is
involved in each element of Cost ) .
How we are Capturing Inefficiencies - may be wastage of Materials ,
Time etc.
Am I doing a COST BENEFIT ANALYSIS
for my every activity ? If not done .
16. How we all have been
collectively
identifying & trying
for reducing costs ?
17. Areas …….
Electricity –
Interest Cost – avoiding delay in submitting stock statements ,
renewal etc
Petrol , Diesel expenses in Vehicles used
Communication expenses - Postage , Courier etc
Printing & Stationery - Printouts on both sides of A4 paper
Rent paid v/s space utilization
Timely renewal of licenses to avoid unnecessary penalties
Water wastage contd…
18. Telephone Expenses - Corporate plans , addl payments for
ring tones / music etc
Travelling Expenses – TA/DA – eg :
Insurance
Management of Stock – “stock = cash”
NPAs
19. Types of Costs
Direct cost /Direct Labor/ Standard Costs Incremental Costs
Sunk Costs Relevant Costs Opportunity Costs Joint
Costs/Overhead /Opportunity Cost / Operating Costs/ Selling
Expenses /Prime Costs: DM + DL /Conversion Costs: DL+ Overhead
Period Costs: Cost incurred during a period. Charged to revenue
immediately within the year /
Product Costs: Costs are charged to products upon sale of the
product /Fixed Costs: Costs remain constant regardless of product
activity
Variable Costs: Costs change with respect to the activity being
supported Semi-variable costs: Mixed Costs like a fixed costs + a
variable component.
Activity based cost .
20. Techniques for being cost competitive
Structured review mechanism
Budgetory control
Root Cause Analysis-Ex-Manpower
turnover
22. What is Finance ?
Personal finance –
Income – expenses = savings
Corporate /business finance –
Sales –expenses = profit
23. ACCOUNTS & FINANCE IS VERY
SIMPLE ?
Write all transactions in chits and put in box
Invoice –income
Loan taken –liability
Car-asset
Dividend – income
24. Income /Profit & loss
Statement
Reports operating success or failure for a time period.
Summarizes revenues and expenses for period: month,
quarter,year.
25. Balance Sheet
At specific date – one point in time!
Assets = Liabilities + Stockholders’ Equity A common
view is to reword to:
Assets - Debts = Net Worth.
26. Assets
Resources owned by the business
Cash
Accounts receivable
Supplies
Inventories
Furniture and fixtures /equipment
27. Intangible Assets
usually have long useful life
Have no physical substance
Examples: patents copyrights trademarks or
trade names trademarks or trade names Franchise
Goodwill.
28. Current Liabilities
Obligations that are supposed to be paid within the
coming year... accounts payable wages payable
bank loans payable interest payable interest
payable taxes payable current maturities of long-
term bank loans payable
29. Liabilities
Obligations or debts of business
Accounts payable
Interest payable
Salaries payable
Unearned revenue
31. Long-Term Liabilities
Debts expected to be paid after one year Examples…
Bonds payable bonds payable
Mortgages payable
Obligations under employee pension plans
32. Contingent Liabilities
Are events with uncertain outcomes.
Lawsuits
Must be recorded as a liability if:
company can determine a reasonable estimate the company can
determine a reasonable estimate of the expected loss and it is
probable it will occur.
Otherwise, mentioned in footnotes.
34. Statement of Cash Flows
Provides information where a company gets cash and
spends cash
Summarizes for period: month, quarter, year.
3 groups: Cash from operating, investing, and
financing activities.
39. WHAT TO DO
Every department must become a cost centre & Profit
centre .
All departments must sit in meeting to define cost
centre ,Profit and the elements of cost sheets .
All employees only drive the company
42. WORKING CAPITAL MANAGING ?
Financial insolvency can
result and lead to legal
troubles, liquidation of
assets and
potential bankruptcy.
43. Who manage working Capital ?
Working capital Cycle completion time ?
Optimal cost Procurements &Inputs services?
Services /Sale to clients /Customers –
Quality of Services /Sales Receivables ?
Actual Receipts –
Optimal Payments / expenses –?
Capital investments /Other than purpose funds are used .
Again stocks –Procurements –
44. HOW ALL DEPARTMENTS CAN
CONTRIBUTE FOR WC MGNT ?
1.Manage procurement and inventory/JIT-Purchase.
2. Pay vendors on time-to get best negotiated price offers
in long term –Purchase & Accounts & sales .
3. Improve the receivables process-invoice sending time .-
sales /service & operation & cash budgeting .
Manage debtors effectively-resolving customer
queries/complaints/issues/CR/DR Notes
If cash is tied up in inventory /Assets or in unpaid
invoices will have a huge effect on cash flow/WC.-So
every department to speed up for their role completion .
45. How to develop KPI /MIS TO
MANAGE WC ?
No of days sales outstanding.
No of days payables outstanding
days inventory outstanding.
Preparing & Managing every departmental Budgets every year is
most required .
Periodical expenses monitoring & comparison with Budgets
required.
We all only can ensure timely salaries.
Atleast 50 % challenge we can solve.
48. Benefits of Managing WC ?
1. Expansion of investment portfolio-Cheap
source of finance for capital investment .
2. Increased profitability-saving of interest
cost .
3. Ensure the availability of sufficient
resources-stocks
Improves overall efficiency of a company.
Abnormal overheads control .
Maintain good relation with suppliers and
other creditors.
Company Market repute increases .
50. YES!!!
We all must practice cost competitiveness and
thereby improve company profitability through
Becoming a KASH generating team to achieve
SMART goals and objectives of the business
