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Jul 13 8 tweets 2 min read Twitter logo Read on Twitter
The Business Checklist

15 Essential Governance Topics you Need to Control.

Because Good Governance is Good Business.
Rules, Practices, Processes to Direct and Control it.

And to Balance the Interests of its many Stakeholders:

Shareholders, Management, Customers, Suppliers, Financiers, Government, and the Community.
In general, Business Governance is mainly concerned with:

1. Structure: how the Business is set up to operate

2. Policies and Procedures: how the Business operates legally and ethically
3. Accountability and Transparency: how the Business is transparent and accountable for its actions

4. Ethics and Integrity: how the Business is honest and trustworthy in its activities

5. Risk Management: how the Business is managing potential risks
6. Compliance: how the Business is complying with laws, regulations, and standards

7. Stakeholder Rights: how the Business is ensures the rights of all stakeholders are respected and protected
8. Corporate Social Responsibility: how the Business is operating responsibly accounting for the interests of its stakeholders.
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Jul 14
EBITDA vs. EVA

Are your accounting profits sufficient to cover:

🎯 the opportunity cost of equity

🎯 the opportunity cost of debt

🎯 or both? Image
The short answer is:

❌EBITDA pays no rent.

✅ EVA pays rent to shareholders and debt holders.

The “rent” is the opportunity cost of capital required to get from Accounting Profit to Economic Profit.
➡️ If economic profit is positive, it means the company is generating returns above the opportunity cost of all resources used, not just the costs recorded on the books

But

➡️ EBITDA doesn’t account for any opportunity costs.
Read 7 tweets
Jul 14
The Overhead ABC.

aka Activity Based Costing.

Here’s what you need to know. Image
🎯 What is Overhead?

Indirect costs or operating expenses not directly attributable to a specific product or service

⚫ Overhead can be manually allocated to products and services

⚫ Rent, utilities, and indirect labor fall under overhead costs
🎯 How is Overhead allocated?

1️⃣ Traditional costing

⚫ A costing methodology where overhead costs are amalgamated into a single cost pool and then allocated based on a single so called “cost driver” like direct labor hours or machine hours
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Jul 14
You have 2 main Controls to improve Business Profitability and avoid Distress.

Many companies use them jointly to compound profitability and growth, but they can be as deadly as they are attractive.

Do you know what they are? Image
𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲 𝗮𝗻𝗱 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲

They have the power to amplify the company's earnings in both directions.

🎯 Modest increases in revenue can greatly enhance earnings.

🎯 Modest drops in sales can trigger dramatic losses
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COO vs. CFO

These critical C-Suite roles have essential responsibilities in steering a company's strategic direction and operational success.

However, many companies have these roles comingled as CFO/COO, which can be confusing. Image
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Here’s how to think about them:

🎯 The CFO focuses on managing and strategizing the company's financial health and growth.
🎯 The COO focuses on managing and strategizing the company's operational efficiency and effectiveness.

🎯 Together they focus on balancing financial planning and operational execution to help the organization achieve its strategic objectives
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Jul 13
What’s it really like being a CFO?

🎯 If you’re a CFO in a small and medium sized company, you may also be the OFO (Only Financial Officer).

🎯 If you’re a CFO in a large organization, you have an entire CFO Office helping you deliver on your 3 key areas of responsibility:
> Controllership (Reporting and Compliance)
> Treasury (Cash Flow Planning)
> Financial Planning and Analysis (Strategic Planning)
As the Chief Financial Officer (CFO) you’re the highest-ranking financial professional in the organization.

🎯 You’re like the Physician to the King, responsible for the fiscal health of the business.
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