Operating Cash Flow (OCF) is a practical measure of a business’ cash flow and may be the single most important metric for measuring the health of your core business operations.
The document discusses the importance of cash flow management for business success. It defines a successful business as one that is not failing and can pay its bills without needing constant funding injections. The key message is that many profitable businesses fail due to negative cash flow. It recommends businesses forecast cash flow, understand which products are most profitable, reduce inefficiencies to control costs, and make decisions that increase cash inflows and decrease outflows. The ultimate measure of success is generating positive net cash flow through good financial management.
The document discusses the importance of cash flow projections for managing finances and avoiding running out of cash. It explains that a cash flow projection looks ahead to see if there will be enough incoming cash to meet outgoing expenses. There are four components to a cash flow projection: beginning balance, incoming cash from operations/investments/financing, outgoing cash, and ending balance. Having a cash flow projection warns of potential cash flow problems in advance so businesses can take actions like reducing spending or increasing income to avoid running out of money.
Stop fearing the cash flow roller coaster(finished)RandyBett
Stop fearing the ups and downs of cash flow management in your business. Understanding your business's cash flow allows you to plan ahead and ensure you can meet your goals. While having cash on hand provides security, your business will stagnate if you fail to deploy excess cash to opportunities for growth and expansion. Properly assessing your company's cash flow through statements prepared by your accountant will help you evaluate expenses, prioritize objectives, and determine how to fund goals that improve or expand your business in a safe and sustainable manner over time.
This document discusses 5 common myths about accounting. It explains that profit does not always equal cash due to timing differences, accounting requires more than just math, an accountant can help with financial tasks but not necessarily make a business profitable on their own, businesses often fail due to running out of cash even if profitable, and the key is understanding break even points and developing a sustainable model.
John J Bowman Jr, and accountant, discusses how businesses can use the cash versus accrual method for their businesses. John J Bowman also details the pros and cons of both methods.
This document outlines the key elements that should be included in a sole financial plan, including profit and loss statements, cash flow statements, balance sheets, sales forecasts, personnel plans, and additional calculations like business ratios and break-even analysis. It provides descriptions and examples of each element, emphasizing that even basic numbers at the beginning stages can be helpful for understanding how the business operates financially. Developing these core financial statements gives owners and potential investors or lenders a clear picture of the business's financial position and performance.
This document discusses financial ratio analysis and the types of ratios used to analyze how well a business is performing. It covers liquidity ratios like the current and quick ratios that measure a company's ability to meet current liabilities, profitability ratios like gross profit margin and net profit margin that measure profit levels, and efficiency ratios like debtor and inventory turnover that measure how efficiently a company utilizes its assets. The document provides examples of key financial ratios and what they indicate about a business's financial health. Analyzing ratios over time and against industry standards helps evaluate a company's performance.
The newsletter provides articles on financial topics like cash flow management, planning retirement withdrawals, understanding credit reports, and paying off debt. It also includes tax tips, QuickBooks tips, and financial planning tips. The document emphasizes the importance of cash flow for businesses and outlines key factors to analyze like accounts receivable, credit terms, inventory, and accounts payable to better manage cash flow. It also discusses the differences between profit and cash flow and highlights options for partial or full withdrawals from retirement plans.
The document discusses the importance of cash flow management for business success. It defines a successful business as one that is not failing and can pay its bills without needing constant funding injections. The key message is that many profitable businesses fail due to negative cash flow. It recommends businesses forecast cash flow, understand which products are most profitable, reduce inefficiencies to control costs, and make decisions that increase cash inflows and decrease outflows. The ultimate measure of success is generating positive net cash flow through good financial management.
The document discusses the importance of cash flow projections for managing finances and avoiding running out of cash. It explains that a cash flow projection looks ahead to see if there will be enough incoming cash to meet outgoing expenses. There are four components to a cash flow projection: beginning balance, incoming cash from operations/investments/financing, outgoing cash, and ending balance. Having a cash flow projection warns of potential cash flow problems in advance so businesses can take actions like reducing spending or increasing income to avoid running out of money.
Stop fearing the cash flow roller coaster(finished)RandyBett
Stop fearing the ups and downs of cash flow management in your business. Understanding your business's cash flow allows you to plan ahead and ensure you can meet your goals. While having cash on hand provides security, your business will stagnate if you fail to deploy excess cash to opportunities for growth and expansion. Properly assessing your company's cash flow through statements prepared by your accountant will help you evaluate expenses, prioritize objectives, and determine how to fund goals that improve or expand your business in a safe and sustainable manner over time.
This document discusses 5 common myths about accounting. It explains that profit does not always equal cash due to timing differences, accounting requires more than just math, an accountant can help with financial tasks but not necessarily make a business profitable on their own, businesses often fail due to running out of cash even if profitable, and the key is understanding break even points and developing a sustainable model.
John J Bowman Jr, and accountant, discusses how businesses can use the cash versus accrual method for their businesses. John J Bowman also details the pros and cons of both methods.
This document outlines the key elements that should be included in a sole financial plan, including profit and loss statements, cash flow statements, balance sheets, sales forecasts, personnel plans, and additional calculations like business ratios and break-even analysis. It provides descriptions and examples of each element, emphasizing that even basic numbers at the beginning stages can be helpful for understanding how the business operates financially. Developing these core financial statements gives owners and potential investors or lenders a clear picture of the business's financial position and performance.
This document discusses financial ratio analysis and the types of ratios used to analyze how well a business is performing. It covers liquidity ratios like the current and quick ratios that measure a company's ability to meet current liabilities, profitability ratios like gross profit margin and net profit margin that measure profit levels, and efficiency ratios like debtor and inventory turnover that measure how efficiently a company utilizes its assets. The document provides examples of key financial ratios and what they indicate about a business's financial health. Analyzing ratios over time and against industry standards helps evaluate a company's performance.
The newsletter provides articles on financial topics like cash flow management, planning retirement withdrawals, understanding credit reports, and paying off debt. It also includes tax tips, QuickBooks tips, and financial planning tips. The document emphasizes the importance of cash flow for businesses and outlines key factors to analyze like accounts receivable, credit terms, inventory, and accounts payable to better manage cash flow. It also discusses the differences between profit and cash flow and highlights options for partial or full withdrawals from retirement plans.
This document provides information on managing cash flow for a business. It discusses the key activities of a business - production, marketing, and accounting. It emphasizes the importance of understanding flows of activity through an organization. This includes communication, sales, treasury, production, quality control, public relations, and executive functions. The document stresses establishing systems to free up an entrepreneur's time and empower others. It defines important financial statements and ratios used to analyze a business's performance and cash flow. Accounting software and bookkeepers are addressed. The purpose of accounting is to improve profits and manage cash flow through coordination of production, marketing, and accounting. Cash flow management involves accelerating cash inflows and slowing outflows.
This document introduces a methodology for turning financial statements into an easy-to-understand story with characters and chapters. It describes representing the income statement, balance sheet, and cash flow statement as two "building blocks": the money making machine and the wealth creation engine. The financial performance is then summarized into a 5 chapter story involving the characters of Vanity, Sanity, and the King. Creating a "treasure map" from the data brings clarity and allows users to identify hidden opportunities or problems within the business. The goal is to make financial statements accessible and actionable for non-experts.
The document discusses cash management and record keeping. It covers basic cash flow concepts like income, expenses, assets and liabilities. It explains the reasons for holding cash like speculative, precautionary and transaction motives. Cash management is defined as forecasting, collecting, disbursing, investing cash needed to operate smoothly. Keeping accurate records helps with tax time, audits and financial statements. A basic record keeping system includes journals, accounts receivable/payable, payroll, petty cash and inventory records. The 4S approach recommends having a system, keeping finances separate, having security and safe storage of records.
A unique way to convert unreadable financial statements into a Treasure Map. Use the map to tell a story and go on a Treasure Hunt to find hidden riches within your business
The Money Map reveals how a small business can profile its financial performance creating real actionable results
The Money Map methodology is not about accounting it is about understanding how your business behaves, the way it makes money and creates wealth.
If you are in business and you know there is a better way, you are in the right place.
You are probably very familiar with the rule that at least 20 percent of your time must be spent working on your business as apposed to working in it. But exactly what does that mean? The Money Map is a powerful methodology to help you work on your business.
During this course you will gain insight into your business in a way you have never dreamed possible. Your business has a story and the way that you can tell your story empowers what you do and how you make good decisions that create fundamental improvements in your financial performance.
The secret lies in the only business scorecard. Yes it's your financial statements. These statements record every transaction in your business. These transactions are based on decisions made either consciously or unconsciously. The way you use your financial statements thus becomes a foundation of the effectiveness of your actions and strategies.
Using your financial statements to identify those constraints and dysfunctions provides you with a powerful catalyst to know what should be focused on and why, enabling you to release significant profit and cash improvement. Isn't that what you are in business for in the first place?
6 Strategies for Consistent Profit & Cashflow PROTRADE United
Inconsistent profits and cash flow can create stress and unnecessary pressure, resulting in reactive decisions that may have you compromising your quality of work and long term results.
Careful cash flow planning and financial strategising allows you to make smarter decisions for the future. There are many simple tools a business owner can use to create consistent, sustainable revenue with a take-home profit.
This document discusses 10 bookkeeping mistakes that can be avoided through outsourcing bookkeeping. It notes that poor financial health from inaccurate accounting can hurt small businesses. Outsourcing ensures efficient accounting through regular expense tracking, account reconciliation, proper employee classification for taxes, and establishing accurate categories. It reduces the risk of fraud or errors from doing the books yourself. Outsourcing provides backup of financial data and management of petty cash. Contact information is provided for the outsourcing service.
Revenue is the biggest driver of profitability. I gave this presentation on how to use the income statement as a tool to plan for business profitability The talk was at Grossmont College in San Diego at Paula Margulies class on Business Planning.
The document discusses key factors for building sustainable businesses. It begins with an agenda that includes a discussion of sustainable business models and an open Q&A session. The main section provides advice on focusing on core customers, controlling direct costs and overheads, launching products quickly and iteratively, managing finances closely, ensuring lifetime customer value exceeds acquisition costs, and not prioritizing venture capital funding over building a business for customers. Unit metrics, path to profitability, revenue, profits and cash flow are emphasized.
We discovered that there are these eight key drivers that drive up the value of a company. The Value Builder assessment gives you a score for each of those eight drivers. This paper gives you the detail behind the Valuation See Saw driver and shows you how to get your own score.
GoSolo Workshop 4: Looking behind the numbersBECO Capital
At this GoSolo presentation we went through the difference between profit and cash flow and ran through how to develop a budget/forecast for your startup.
We discovered that there are these eight key drivers that drive up the value of a company. The Value Builder assessment gives you a score for each of those eight drivers. This paper gives you the detail behind the Switzerland Structure driver and shows you how to get your own score.
This document provides an overview of a presentation on financial projections. It introduces the two speakers and their relevant experience. The presentation will focus on how to create financial projections using a spreadsheet and common accounting knowledge, and why projections are important to show investors that all financial implications have been considered. It emphasizes that projections should be built carefully by tying assumptions and numbers to the business model and forcing discipline, and that scenario planning should examine different potential outcomes based on key metrics. Common terms are defined and how to structure projections in a profit and loss statement, balance sheet, and cash flow with assumptions is described.
Understanding financial statements - a business toolWomen In Business
I used this presentation at a recent workshop of SMME's hosted by SEDA. Purpose was to encourage SMME's to understand the basics of their financial statements and use them as management and decision making tools.
The document provides an overview of an upcoming presentation on financial projections for startups seeking funding. It introduces the two speakers and their backgrounds in finance and business valuations. The presentation will focus on how to build financial projections and why they are important for investors. It will cover objectives like demonstrating understanding of the business model and forcing due diligence. The document addresses common questions and concerns about projections and provides tips on assumptions, scenario planning, and building projections properly in a spreadsheet.
This is an initial introduction to accounting. There are four types of accounting: bookkeeping, financial, managerial, and tax. Accounting records are probably the first written records and double entry bookkeeping is over 500 years old. Accounting is a fundamental concept of modern life.
Accounting tips for small business canada by accountant oakville and mississaugaH & T Accountant Services
We are located in Mississauga and Brampton, Ontario, servicing these and surrounding areas of the Greater Toronto Area (GTA) such as Milton, Oakville, Georgetown, Etobicoke, and Vaughan. We can prepare for you any documents you need to file with various government departments regarding income tax, harmonized sales tax, workplace safety insurance, and payroll.
The 8 biggest mistakes made by small businessColin Wright
Too many small business owners start losing track of the true picture of performance once the size and complexity of the business increases. Are you making one of these 8 critical mistakes?
You need a cash flow statement to understand how much money is coming into and leaving your company. Every time you examine a financial statement, you should look at it from a business standpoint. The purpose of financial documentation is to shed light on an organisation's financial situation and health.
This document provides information on managing cash flow for a business. It discusses the key activities of a business - production, marketing, and accounting. It emphasizes the importance of understanding flows of activity through an organization. This includes communication, sales, treasury, production, quality control, public relations, and executive functions. The document stresses establishing systems to free up an entrepreneur's time and empower others. It defines important financial statements and ratios used to analyze a business's performance and cash flow. Accounting software and bookkeepers are addressed. The purpose of accounting is to improve profits and manage cash flow through coordination of production, marketing, and accounting. Cash flow management involves accelerating cash inflows and slowing outflows.
This document introduces a methodology for turning financial statements into an easy-to-understand story with characters and chapters. It describes representing the income statement, balance sheet, and cash flow statement as two "building blocks": the money making machine and the wealth creation engine. The financial performance is then summarized into a 5 chapter story involving the characters of Vanity, Sanity, and the King. Creating a "treasure map" from the data brings clarity and allows users to identify hidden opportunities or problems within the business. The goal is to make financial statements accessible and actionable for non-experts.
The document discusses cash management and record keeping. It covers basic cash flow concepts like income, expenses, assets and liabilities. It explains the reasons for holding cash like speculative, precautionary and transaction motives. Cash management is defined as forecasting, collecting, disbursing, investing cash needed to operate smoothly. Keeping accurate records helps with tax time, audits and financial statements. A basic record keeping system includes journals, accounts receivable/payable, payroll, petty cash and inventory records. The 4S approach recommends having a system, keeping finances separate, having security and safe storage of records.
A unique way to convert unreadable financial statements into a Treasure Map. Use the map to tell a story and go on a Treasure Hunt to find hidden riches within your business
The Money Map reveals how a small business can profile its financial performance creating real actionable results
The Money Map methodology is not about accounting it is about understanding how your business behaves, the way it makes money and creates wealth.
If you are in business and you know there is a better way, you are in the right place.
You are probably very familiar with the rule that at least 20 percent of your time must be spent working on your business as apposed to working in it. But exactly what does that mean? The Money Map is a powerful methodology to help you work on your business.
During this course you will gain insight into your business in a way you have never dreamed possible. Your business has a story and the way that you can tell your story empowers what you do and how you make good decisions that create fundamental improvements in your financial performance.
The secret lies in the only business scorecard. Yes it's your financial statements. These statements record every transaction in your business. These transactions are based on decisions made either consciously or unconsciously. The way you use your financial statements thus becomes a foundation of the effectiveness of your actions and strategies.
Using your financial statements to identify those constraints and dysfunctions provides you with a powerful catalyst to know what should be focused on and why, enabling you to release significant profit and cash improvement. Isn't that what you are in business for in the first place?
6 Strategies for Consistent Profit & Cashflow PROTRADE United
Inconsistent profits and cash flow can create stress and unnecessary pressure, resulting in reactive decisions that may have you compromising your quality of work and long term results.
Careful cash flow planning and financial strategising allows you to make smarter decisions for the future. There are many simple tools a business owner can use to create consistent, sustainable revenue with a take-home profit.
This document discusses 10 bookkeeping mistakes that can be avoided through outsourcing bookkeeping. It notes that poor financial health from inaccurate accounting can hurt small businesses. Outsourcing ensures efficient accounting through regular expense tracking, account reconciliation, proper employee classification for taxes, and establishing accurate categories. It reduces the risk of fraud or errors from doing the books yourself. Outsourcing provides backup of financial data and management of petty cash. Contact information is provided for the outsourcing service.
Revenue is the biggest driver of profitability. I gave this presentation on how to use the income statement as a tool to plan for business profitability The talk was at Grossmont College in San Diego at Paula Margulies class on Business Planning.
The document discusses key factors for building sustainable businesses. It begins with an agenda that includes a discussion of sustainable business models and an open Q&A session. The main section provides advice on focusing on core customers, controlling direct costs and overheads, launching products quickly and iteratively, managing finances closely, ensuring lifetime customer value exceeds acquisition costs, and not prioritizing venture capital funding over building a business for customers. Unit metrics, path to profitability, revenue, profits and cash flow are emphasized.
We discovered that there are these eight key drivers that drive up the value of a company. The Value Builder assessment gives you a score for each of those eight drivers. This paper gives you the detail behind the Valuation See Saw driver and shows you how to get your own score.
GoSolo Workshop 4: Looking behind the numbersBECO Capital
At this GoSolo presentation we went through the difference between profit and cash flow and ran through how to develop a budget/forecast for your startup.
We discovered that there are these eight key drivers that drive up the value of a company. The Value Builder assessment gives you a score for each of those eight drivers. This paper gives you the detail behind the Switzerland Structure driver and shows you how to get your own score.
This document provides an overview of a presentation on financial projections. It introduces the two speakers and their relevant experience. The presentation will focus on how to create financial projections using a spreadsheet and common accounting knowledge, and why projections are important to show investors that all financial implications have been considered. It emphasizes that projections should be built carefully by tying assumptions and numbers to the business model and forcing discipline, and that scenario planning should examine different potential outcomes based on key metrics. Common terms are defined and how to structure projections in a profit and loss statement, balance sheet, and cash flow with assumptions is described.
Understanding financial statements - a business toolWomen In Business
I used this presentation at a recent workshop of SMME's hosted by SEDA. Purpose was to encourage SMME's to understand the basics of their financial statements and use them as management and decision making tools.
The document provides an overview of an upcoming presentation on financial projections for startups seeking funding. It introduces the two speakers and their backgrounds in finance and business valuations. The presentation will focus on how to build financial projections and why they are important for investors. It will cover objectives like demonstrating understanding of the business model and forcing due diligence. The document addresses common questions and concerns about projections and provides tips on assumptions, scenario planning, and building projections properly in a spreadsheet.
This is an initial introduction to accounting. There are four types of accounting: bookkeeping, financial, managerial, and tax. Accounting records are probably the first written records and double entry bookkeeping is over 500 years old. Accounting is a fundamental concept of modern life.
Accounting tips for small business canada by accountant oakville and mississaugaH & T Accountant Services
We are located in Mississauga and Brampton, Ontario, servicing these and surrounding areas of the Greater Toronto Area (GTA) such as Milton, Oakville, Georgetown, Etobicoke, and Vaughan. We can prepare for you any documents you need to file with various government departments regarding income tax, harmonized sales tax, workplace safety insurance, and payroll.
The 8 biggest mistakes made by small businessColin Wright
Too many small business owners start losing track of the true picture of performance once the size and complexity of the business increases. Are you making one of these 8 critical mistakes?
You need a cash flow statement to understand how much money is coming into and leaving your company. Every time you examine a financial statement, you should look at it from a business standpoint. The purpose of financial documentation is to shed light on an organisation's financial situation and health.
The document provides an overview of accrual accounting. It defines accrual accounting as requiring transactions to be recorded when they occur rather than when cash is received or spent. The advantages of accrual accounting include compliance with GAAP, increased transparency through reflecting future cash flows, and better strategic planning. The disadvantages include complexity, difficulty switching methods, and potential vulnerability to fraud. The document also discusses accounting transactions, balances, assets, liabilities, double-entry bookkeeping, and the fundamental accounting equation.
Cash flow is the lifeblood of a business and measures its ability to pay bills on time. It depends on the timing and amount of money coming into and going out of the business. Cash inflows include payments from customers, loans, and investments, while cash outflows comprise expenses like materials, wages, taxes, and loan repayments. Cash flow and profit are different - a business can be profitable but still experience cash flow issues. Careful cash flow forecasting and management, like collecting debts promptly or leasing equipment, can help improve a business's cash position over time.
small business & epreneurship development U4.pdfkittustudy7
Financial management is vital for small businesses. It involves planning, organizing, and controlling financial activities like cash flow, budgets, and financial reporting to achieve business goals. Effective financial management requires skills in bookkeeping, forecasting, risk assessment, and capital structure optimization. Key aspects of financial management for small businesses include cash flow management, budgeting, and analyzing financial performance metrics like profit margins and return on investment. Common challenges include managing budgets, making payroll, paying bills on time, controlling debt, securing financing, and understanding different financing products.
An ultimate guide on bootstrapping your small business in 2019Merchant Advisors
This document provides guidance on bootstrapping or self-financing a small business. It discusses that bootstrapping means managing a business using only one's own cash reserves rather than taking on debt or outside investment. Some benefits of bootstrapping include maintaining full control over the business and spending money intelligently without obligations to lenders or investors. However, bootstrapping also limits growth opportunities and access to outside advice. The document provides tips for when bootstrapping may be preferable and how to effectively manage costs, cash flow, and financing while self-funding a small business.
The document provides guidance on how to prepare a cash flow statement for a business. It explains that a cash flow statement traces the flow of funds into and out of a business during an accounting period and is important for financial management. It then outlines the key components of a cash flow statement, including operating, investing and financing activities. The document walks through how to construct a cash flow statement step-by-step using sample income statement and balance sheet data from a fictional company. It covers calculating cash flows directly from revenue and expense accounts or indirectly by reconciling net income.
Cashflow is the most fundamental aspect of measuring and operating any business. A business must consistently take in more cash than it pays out or it will fail. Receivables, inventory, capital, debt, and payables all represent cash that is tied up in the business. Proper management of the timing of cash inflows and outflows is critical, as a business can fail even if other measures look good on paper if it cannot meet its payment obligations. Cashflow is the ultimate measure of success for any business regardless of size.
Cash management techniques help businesses efficiently manage cash inflows and outflows. Some key techniques include budgeting to reduce expenses, investing excess cash, using credit judiciously, and generating additional income. Businesses can also use physical cash management services, electronic funds transfer, controlled disbursement of checks, sweep accounts to maximize interest, and cash concentration. Choosing the appropriate combination of techniques from banks can optimize a business's cash management.
Canadian small businesses are thriving, accounting for 98% of employer businesses in Canada. Entrepreneurship is on the rise as more people seek autonomy and flexibility in their careers. While the work can be challenging, most small business owners report being happier and more financially secure as a result of going out on their own. Cash flow management is a key concern for small businesses, as unexpected dips in revenue or growth can strain operations. Maintaining positive cash flow is critical for small business success and longevity.
5 Rules for an Entrepreneur - Practical Tips to starting rightRuth Rey Clark
As an entrepreneur, you need to be able to quickly identify the risks and opportunities in any new business venture. If you’re thinking about starting your venture, there are some rules that all entrepreneurs should follow as part of their business plan. These will guide them through the ups and downs of this challenging new role. Here are the five rules for an entrepreneur that you should know to succeed as an entrepreneur.
Bookkeeping is the process of recording all financial transactions in a company's accounts on a daily basis. This includes documenting bills, receipts, invoices, and other business documents. Transactions can be recorded by hand, in a spreadsheet, or using bookkeeping software. Maintaining accurate bookkeeping allows a business to monitor its finances, performance, and progress toward goals. It provides the financial records needed to understand a company's financial situation and address any issues.
Here are the best 9 ways you can improve your company’s Financial Management Processes: 1. Identify Bottlenecks In Financial Management 2. Sustain A Good Business Credit 3. Support Your Finance Department 4. Monitor Return On Investment
Steering a small business towards success requires more than just passion and a good idea. At its core, understanding the intricacies of finance is crucial for sustainability and growth. If you're at the onset of your entrepreneurial journey or need a refresher, here's a beginner's guide to small business finance.
This document provides an overview of a seminar on formulating strategies and action plans for financial stability during slow economic periods. The seminar agenda covers available government assistance programs, managing late payments, tax computation, and a question and answer session. The presentation discusses analyzing financial statements, developing a target financial situation and steps to close the gap between the current and target situations. It also outlines government grant programs for small businesses, including the Innovation and Capability Voucher and Capability Development Grant. The presentation provides examples of how these grants can be used to improve financial management and support business growth.
This document discusses cash flow management for businesses. It provides an overview of basic financial reports like the balance sheet, income statement, and statement of cash flows. It emphasizes the importance of cash flow planning and analysis, as many small businesses fail due to cash flow issues rather than lack of profitability. The key aspects of cash management covered are forecasting cash receipts and disbursements to create a cash budget, managing accounts receivable, accounts payable, and inventory levels to optimize cash flow. Strategies are provided for accelerating cash collection, negotiating payment terms, and avoiding cash shortages.
Discover the five easiest steps for cash to accrual conversion! Clear your confusion fro conversion. Transtutors presents five steps to follow to convert cash accounting into accrual accounting.
For accounting homework help or any type of questions on accounting, ask Transtutors' experts available 24x7 to help students.
www.transtutors.com
The document discusses cash flows for a company over three years (1991, 1990, 1989). In 1990, major sources of cash were from investing activities. In 1989, major sources of cash were from financing activities. In 1991, major sources of cash came from operating activities followed by investing activities. Major uses of cash in 1991 were less than operating activities. In 1990 and 1989, major uses of cash were financing activities. Cash flow from operations was greater than net income in all three years. Current assets were primarily sources of cash in 1991 and 1990, while current assets were uses of cash in 1989. Current liabilities were uses of cash in 1991.
Andrew has extensive experience in all aspects of personal and corporate insolvency and advisory in Australia. With over 18 years of experience gained working in two of Australia’s foremost corporate restructuring and advisory firms, Andrew is an expert on business restructuring. To know more come to visit here : https://dorksdelivered.com.au/working-capital-and-cash-flow-tips-with-andrew-weatherley/
This document provides 15 frequently asked questions about starting and running a small business. It addresses questions about determining if someone has the right characteristics to be an entrepreneur, how to evaluate one's own skills and capabilities for starting a business, the importance of writing a business plan even without seeking financing, how to determine startup costs and expenses, the purpose and importance of financial statements, why monthly cash flow analysis is critical, ways to obtain cash to maintain and grow a business, why location is so important, how to evaluate competition, strategies for better marketing a business, what to consider when creating marketing brochures, how to improve customer service, and resources for getting answers to business-specific questions. SCORE is identified as an organization that provides free
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The impact of OTT platforms on the Bollywood film industry is significant. The competition for viewers has led to a decrease in cinema ticket sales, affecting the revenue of Bollywood films that traditionally rely on theatrical releases. Additionally, OTT platforms now pay less for film rights due to the uncertain success of films in cinemas.
Looking ahead, the future of OTT in India appears promising. The market is expected to grow by 20% annually, reaching a value of ₹1200 billion by the end of the decade. The increasing availability of affordable smartphones and internet access will drive this growth, making OTT platforms a primary source of entertainment for many viewers.
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Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
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Why You Should Monitor Operating Cash Flow and How to Do It
1. Why You Should Monitor
Operating Cash Flow and
How to Do It
A SPECIAL REPORT FROM THE CREATORS OF SMART BUSINESS MONEY HABITS™
2. Cash flow. What is it?
Search on the internet for the term
“cash flow” and you’ll find common
agreement with Wikipedia that “Cash
Flow is the movement of money into or
out of a business”. As accurate as this
definition may be, it’s not very helpful
to the entrepreneur wrestling with a
cash flow problem or working to avoid
such problems.
Cash flow. What it’s not.
Cash flow is not the same as profit. It is
not the same as cash in the bank. It is
not necessarily a good measure of
how well your business is doing. Having
lots of cash flow does not necessarily
mean you have lots of profit or even
any profit. Alternatively, a high level of
profit can be obtained while cash flow
is weak or even non-existent.
3. Now let’s go
back to that
seemingly
meaningless
definition and
flesh it out a
bit….
“CASH FLOW IS THE
MOVEMENT OF MONEY INTO
OR OUT OF A BUSINESS”
4. A practical measure of a business’
cash flow is called “Operating
Cash Flow” (OCF)
Also known as “Cash Flow from Operations,” OCF is a basic financial measure
that tells us how well a business is really doing.
5. “
”
Operating Cash Flow may be the
single most important metric for
measuring the health of your
core business operations.
6. OCF tells you how much cash you
generate from operating your business.
It counts only the money coming from
customers.
It excludes money coming from loans
or from your pocket.
It deducts only the cash paid to
suppliers and for the general expenses
of operating the business.
It excludes money going out for loan
repayment as well as money used to
reinvest for growth such as buying
equipment or buildings.
The result shows whether operating
your business creates cash (positive
cash flow) or consumes cash
(negative cash flow).
7. IF BASIC OPERATIONS ARE
CONSUMING CASH, THAT IS
A HUGE WARNING SIGN
THAT YOUR BUSINESS IS ON
DANGEROUS GROUND.
8. OCF is the source
of funds to repay
debt, buy needed
equipment, and
pay dividends or
distributions to
owners.
OCF MUST BE POSITIVE
(CREATING CASH) IF YOUR
BUSINESS IS TO SURVIVE.
9. How do we calculate OCF?
It may be as simple as printing an OCF statement from your computer
accounting program.
If your program is not set up to print an OCF statement, here is the formula to
manually calculate OCF…
10. The Formula for Calculating Operating
Cash Flow
Operating Cash Flow (OCF) = Net Income
plus Depreciation & Amortization
plus decrease or minus increase in Accounts
Receivable
plus decrease or minus increase in Inventory
plus increase or minus decrease in Accounts
Payable
plus loss or minus gain from sale of assets
(It will take less than five minutes to take the numbers from your Income Statement (P&L) and Balance Sheet
and insert them in the formula.)
11. Here are two real-life examples…
Company A Company B
Net Income 254,000 254,000
plus Depreciation 14,000 14,000
minus A/R increase 15,000 50,000
minus Inventory increase 3,000 20,000
plus A/P increase 12,000 2,000
Operating Cash Flow 262,000 200,000
13. Company B
has cause
for concern.
Although their
OCF is positive, it
is much less than
Net Income.
From the increase in Accounts Receivable, it appears they may
be growing too rapidly and consuming their cash.
14. “
”
Businesses often don’t go broke,
they grow broke.
THIS MEANS THEY GROW FASTER THAN THEIR CASH FLOW CAN SUPPORT
Growing too fast is a common cause of cash flow crises and business failure.
15. Now that you know your OCF, what
do you do about it?
As mentioned above, the first test is to see whether your business is creating or
consuming cash.
If it is creating cash, the next step is to compare OCF with Net Income. Ideally,
OCF is more than Net Income.
However, a growing business will often have OCF that is less than Net Income.
This condition cannot exist for long before your business will be out of cash.
Rapidly growing businesses must generally find sources of cash in addition to
OCF.
The sources will be either loans, further investment of cash in the business by the
owner, or funds from investors.
16. But what about
a business that is
consuming
cash?
THAT CONDITION MUST BE
CORRECTED OR SURVIVAL IS
UNLIKELY.
17. The Cash-Eating Business
You can begin the analysis process by studying the formula and each
entry you inserted into the formula.
If you don’t find the source of the problem in that analysis, you must go to
the Income Statement for the answer.
If solutions are not forthcoming, it is time to seek professional advice. Your
accountant or one of the Smart Business Money Habits Advisors can
provide the help you need.
18. For businesses in the startup or
early operating stages…
…use Smart Business Money Habits #6: At the end of each
week, project your cash on hand for the next 4 weeks and
#7: Prepare a reliable action plan for dealing with
projected cash shortages to begin the cash flow
projection habit so necessary to business survival and
success.
19. For businesses in more advanced
operating stages…
…use the more sophisticated and focused Smart Business
Money Habit #21: Implement an advanced system for
tracking and managing your business finances including
more detailed cash flow projections to gain control over
operations and, most importantly, gain control over
growth.
20. Tools for
implementing
these Habits are
part of the Basic
and Advanced
More Profit
Toolkits™.
FOR MORE DETAILS ABOUT
THE MORE PROFIT TOOLKIT,
GO TO:
www.MoreProfitToolkit.com
21. How to Put More Profit in Your Pocket
You can also find additional
information to actively use the Smart
Business Money Habits to increase your
profits in our eBook, How to Put More
Profit in Your Pocket: Practical
Principles for Building a Highly
Profitable, Valuable, and Sustainable
Business.
Learn more at:
www.SmartBusinessMoneyHabits.com
22. “
”
If you don’t control your cash,
you can’t control your business.
Don’t delay putting our Cash Flow Habits into
practice if you want to create a profitable,
valuable, and sustainable business.
23. About
Dan Bowser and George Huang are the
founders of Business Money Insights (BMI) and
creators of the Smart Business Money Habits
and the More Profit Toolkit. BMI is an education
and training company dedicated to helping
independent business owners make and keep
more profit from their businesses.
Their mission is to help entrepreneurs become
successful by introducing financial
management and discipline to their businesses.
You can learn more at:
www.SmartBusinessMoneyHabits.com