Budgets vs. Forecasts vs. Projections

They're not the same. And you probably need them all. 🎯 Budgets:

➡️ Align spending plans with revenue generation and strategic objectives.

➡️ Set the baseline for performance metrics.

➡️ Serve as a control mechanism for effective cost management.

🎯Forecasts:

How to Analyze a Cash Flow Statement in 10 Steps 1️⃣ Start with Net Income

🎯 Examine the P&L first because that is where indirect cash flow statements start

🎯 Understand the sustainability and reliability of earnings by examining the revenue and expenses that drive them

2️⃣ Non-Cash Adjustments

The Financial Analysis Checklist.

Because financial analysis is not crunching numbers. ➡️➡️➡️Here are the 15 areas covered inside 𝐓𝐡𝐞 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 𝐂𝐡𝐞𝐚𝐭 𝐒𝐡𝐞𝐞𝐭:

1. Define Objectives: Set key goals for your financial analysis.

2. Data Collection: Gather relevant financial and operational data.

The P&L and The Balance Sheet may think they're the popular kids.

But the real cool kid on the block is the Cash Flow Statement. Because a company might have a profitable P&L,
And still face bankruptcy without enough cash:
To fund operating costs.
To invest in growth.
To service debt.

Learn to Manage Cash.

Here's why:

To seize growth opportunities
To protect against critical business risks
To avoid financial distress and loss of business value
To maximize shareholder value and return on investment. 🎯 Cash comes into a business from 3 main sources:

>> Operations
>> Investments
>> Financing

🎯 Cash 1.0 is optimizing AR, AP and Inventory terms and turnover

🎯 Cash 2.0 is working on:

>> Cash Flow Forecasting Techniques
>> Effective Debt Management

CEOs dream big.

But they also struggle big. They struggle to make informed decisions
They struggle to align goals across their organizations.
They struggle to implement effective performance management

Here’s a 15 point checklist with 140+ check points to help CEOs achieve big dreams.

Is EBITDA the same as Free Cash Flow?

You'd be surprised.

No it's not. Here's why:

1️⃣ EBITDA is not a GAAP metric so everyone calculates it however they like.

Then they try to persuade you to buy into their formula.

2️⃣ EBITDA implies that all net income translates into cash the same way, ignoring non cash expenses and working capital changes.

EBITDA is Not Cash Flow.

Here are 10 Problems You Should Know.

Whether you like it or not, EBITDA is here to stay. 🎯 Here are 10 Critical Flaws of EBITDA you should be aware of:

1. It is not a GAAP metric.
2. It is a poor measure of profitability.
3. It implies that loan repayment gets prioritized.
4. It doesn’t say anything about the quality of earnings.
5.

20 Cash Flow Drivers You Should Know

Because your Business grows with Revenue and ends with Cash Flow. ➡️ Cash flow performance metrics help you assess your company's financial health, operating efficiency, liquidity and performance.

➡️ The 3 main cash flow drivers are Revenue, Operating Margin, and Operational Efficiency and each of these drivers should get monitored

EBITDA vs. EVA

Don't get tricked by EBITDA. Make sure your accounting profits are sufficient to cover:

🎯 the opportunity cost of equity
🎯 the opportunity cost of debt

❌EBITDA covers none.

✅ EVA covers both.

Gross Profit is not Contribution Margin.

Gross Margin is also not Contribution Margin.

So then what is Contribution Margin? And how do you use it? ⚫ Gross Profit is often used interchangeably with Gross Margin, through one is an absolute difference (amount) and the other is a relative difference (percentage).

⚫ The real comparison is between Gross Profit and Contribution Margin.

Is Your Cash Flow Statement Direct or Indirect? Cash flow statements have 3 main sections:

➡️ Operating cash flows / Cash flow from operations
➡️ Investing cash flows / Cash flows from investing
➡️ Financing cash flows / Cash flows from financing

Learn your Cash Flows.

Because cash flow is the lifeblood of a business.
And failing this drives companies into bankruptcy. There are the 3 types of business activities to know.
Each activity can absorb or release cash into a business.
Here's what you should know and how to master each cash flow.

EBITDA vs. OCF vs FCF vs. FCFE

This is the ultimate Battle of the Cash Flows. Let’s see who wins. 1️⃣ EBITDA

⚫ Not a GAAP metric

⚫ Not a cash flow metric despite often being mistaken for one.

⚫ Discretionarily adjusted. Non-cash adjustments beyond Depreciation and Amortization are all the rage in quarterly calls and annual reports.

This may just be the best kept secret in Finance. If you want to measure overall Financial Performance

DuPont Analysis will tell you everything you need to know.

And that’s because too many people forget that Profits need to turn into Cash

If you want higher profits, margins, returns, cash flows…

Then make sure you start with Financial Analysis.
I’ve been doing this successfully for 15 years.

Here’s my 3 step approach to drive results:

1. Understand the company’s Past
2. Monitor their Present 3. Project the Future.

Here are 10 Tools
To get started

NOPAT vs. EBIT

Are they real?
Are they GAAP?
Which one to use?
How are they different?
Do you really need both? 🎯NOPAT and EBIT are frequently used to evaluate a company's profitability.

However, they are calculated differently and serve distinct purposes.

↪️ NOPAT (Net Operating Profit After Tax) represents a company's operating profit after tax deductions.

12 Profitability KPIs You Should Measure, Monitor and Benchmark. Here’s what they are and how to interpret them:

1. Gross Profit Margin Ratio: (Gross Profit / Sales) x 100
🎯 measures the percentage of sales that remain after deducting cost of goods sold.

2. Contribution Margin: (Sales - Variable Costs)/Sales x 100

Margin is not Markup. ▶️ Margin shows how much of a product's sales price or revenue you got to keep.

▶️ Markup shows how much over cost you've sold your product(s) for.

🎯 Let's dig deeper into each of these .

12 Financial Skills all Managers Should Learn.

Why they should learn them.

And how to get there. 1// Financial Statement Analysis

🎯 Understand and examine the basic financial statements (income statement, balance sheet, and cash flow statement) to assess your company's financial performance and position, and to identify relevant trends and patterns.

Everyone is talking about SWOT, PESTEL, VRIO and Porter's 5 Forces. But nobody is showing you how to use them.

Here's a checklist with 12 Essential Strategic Frameworks you Need to Know.

And the steps to take so you can actually use them in your organization.

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