The document discusses various methods for improving financial performance, including value analysis, DuPont analysis, and cash-to-cash cycle analysis. It provides examples of how reducing inventory levels, expenses, and days sales outstanding, as well as increasing days payable outstanding, can positively impact key metrics like net profit margin, asset turnover, and return on assets. Reducing the cash-to-cash cycle through working capital management strategies is emphasized as an effective way to free up capital and improve profitability.

1. Bottom Line Improvement Financial Performance Improvement Anand Subramaniam

4. Value Analysis

7. Dupont Analysis Strategic Profit Model

8. Dupont Model Sales ( $ $ $ $ $ $ $ $ $ $ $ $ $ $ - Cost of goods sold Direct expenses + Indirect expenses Inventory + Accounts receivable + Other current assets % % ) Gross Margin - Total Expenses Net Profit ÷ Sales Net profit margin ( net proft net sales ) Current assets + Fixed assets Sales / Total assets Assets turnover Return on net worth Financial leverage Return on assets = x ( total assets net worth ) = x ( net profit total assets ) $ net profts net worth

9. Current Situation (Baseline) SALES COST OF GOODS SOLD DIRECT EXPENSE INDIRECT EXPENSE INVENTORY ACCOUNTS RECEIVABLE OTHER CURRENT ASSETS GROSS MARGIN TOTAL EXPENSES CURRENT ASSETS FIXED ASSETS TOTAL ASSETS SALES SALES NET PROFIT NET PROFIT MARGIN ASSET TURNOVER RETURN ON ASSETS 2000 300 1500 100 400 100 100 500 400 600 400 2000 1000 5% TIMES net profit net sales net sales total assets - + + + - + ÷ ÷ ( ) ) ( 2 100 10% 2000 Price Quantity x Cost of goods Quantity x Transportation Handling Storage Space Promotion etc.

10. ROI Impact - $100 Inv. Reduction SALES COST OF GOODS SOLD DIRECT EXPENSE INDIRECT EXPENSE INVENTORY ACCOUNTS RECEIVABLE OTHER CURRENT ASSETS GROSS MARGIN TOTAL EXPENSES CURRENT ASSETS FIXED ASSETS TOTAL ASSETS SALES SALES NET PROFIT NET PROFIT MARGIN ASSET TURNOVER RETURN ON ASSETS 2000 300 1500 100 300 100 100 500 400 500 400 2000 900 5% TIMES net profit net sales net sales total assets - + + + - + ÷ ÷ ( ) ) ( 2.22 100 11.11% 2000 Price Quantity x Cost of goods Quantity x Transportation Handling Storage Space Promotion etc.

11. ROI Impact - $25 Exp. Reduction SALES COST OF GOODS SOLD DIRECT EXPENSE INDIRECT EXPENSE INVENTORY ACCOUNTS RECEIVABLE OTHER CURRENT ASSETS GROSS MARGIN TOTAL EXPENSES CURRENT ASSETS FIXED ASSETS TOTAL ASSETS SALES SALES NET PROFIT NET PROFIT MARGIN ASSET TURNOVER RETURN ON ASSETS 2000 275 1500 100 400 100 100 500 375 600 400 2000 1000 6.25% TIMES net profit net sales net sales total assets - + + + - + ÷ ÷ ( ) ) ( 2 125 12.5% 2000 Price Quantity x Cost of goods Quantity x Transportation Handling Storage Space Promotion etc.

12. Cash to Cash Cycle Working Capital Management

13. Working Capital Strategies Financial Performance Profitability Growth Capital Utlisation Cost of Goods Sold Selling Price Fixed Capital Utilisation Working Capital Utilisation Days Inventory Days Sales Outstanding Days Purchase Outstanding