Long Term Mindset on LinkedIn: 10 Balance Sheet KPIs every FP&A leader should know Post credit by:… (2024)

KPIs provide you with a general picture of the overall health of your business. Acquiring insights afforded by your KPIs allows you to be proactive in making necessary changes in under-performing areas, preventing potentially serious losses whilst ensuring long-term sustainability of your company's operating model, and helps increase your business's value as an investment.#businessanalytics #strategicanalysis #businessperformance #fpa #ratioanalysis

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KPIs, or Key Performance Indicators, can be immensely valuable for businesses because they provide a clear and measurable way to track progress and evaluate success. Here are a few ways in which KPIs can help businesses:Goal setting and tracking: KPIs help businesses to set clear and specific goals, and then track progress towards those goals. This ensures that everyone in the organization is aligned towards a common objective, and can work together to achieve it.Performance monitoring: KPIs provide a way to monitor the performance of various aspects of the business, such as sales, marketing, customer satisfaction, employee productivity, and more. This allows managers to identify areas that need improvement and take corrective actions.Decision-making: KPIs provide data-driven insights that can inform business decisions. For example, if a KPI indicates that customer satisfaction is declining, managers can investigate the cause and take steps to address it.Accountability: KPIs help to hold individuals and teams accountable for their performance. When everyone is aware of the KPIs they are responsible for, it creates a sense of ownership and responsibility, which can lead to improved performance.Overall, KPIs provide a way to measure progress, identify areas for improvement, and make data-driven decisions, all of which can help businesses to be more successful.

🧿 𝗛𝗲𝗿𝗲 𝗶𝘀 𝘄𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗖𝗵𝗲𝗮𝘁 𝗦𝗵𝗲𝗲𝘁 𝗶𝗻𝗰𝗹𝘂𝗱𝗲:▶️ Definitions of key terms▶️ Cash flow statement presentation▶️ Direct vs indirect cash flow method▶️ US GAAP comparison note▶️ 18 Cash flow drivers▶️ Cash flow vs EBIT▶️ Cash conversion cycle explained▶️ Cash flow in valuations▶️ 6 Cash flow forecast steps

Interesting insights on EBITDA & Adjusted EBITDA 💯💯💯

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The Cash Flow Cheat Sheet!!While the balance sheet is anatomy of the business, income statements its physiology, CASH FLOW is life blood of the business. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗶𝘀 𝗲𝘀𝘀𝗲𝗻𝘁𝗶𝗮𝗹 𝗳𝗼𝗿 𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁, 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗺𝗮𝗸𝗶𝗻𝗴, 𝗮𝗻𝗱 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆:📈 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁Understand how money is moving in and out of your accounts, allowing you to effectively plan and manage your finances.📉 𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 𝗮𝗻𝗱 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴By tracking your cash inflows and outflows, you can anticipate periods of surplus or deficit, make informed decisions, and adjust your spending and investment strategies accordingly.📈 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀Maintain liquidity and avoid cash shortages that can disrupt operations.📉 𝗖𝗿𝗲𝗱𝗶𝘁𝘄𝗼𝗿𝘁𝗵𝗶𝗻𝗲𝘀𝘀Lenders and investors often assess the cash flow of individuals and businesses when making lending or investment decisions. 📉 𝗥𝗶𝘀𝗸 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁Anticipate and address cash flow gaps, manage debt obligations, and build financial reserves to handle unforeseen circ*mstances or economic downturns.🚀 𝗛𝗲𝗹𝗽 𝗺𝗲 𝘀𝗵𝗮𝗿𝗲 𝘁𝗵𝗶𝘀 𝗲𝘀𝘀𝗲𝗻𝘁𝗶𝗮𝗹 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝘄𝗶𝘁𝗵 𝘁𝗵𝗶𝘀 𝗙𝗥𝗘𝗘 𝗖𝗵𝗲𝗮𝘁 𝗦𝗵𝗲𝗲𝘁.👍 👍 👍 𝗟𝗶𝗸𝗲, 𝗦𝗵𝗮𝗿𝗲 𝗮𝗻𝗱 𝗖𝗼𝗺𝗺𝗲𝗻𝘁 𝘀𝗼 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁 𝗰𝗮𝗻 𝗿𝗲𝗮𝗰𝗵 𝗽𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹𝘀 𝘄𝗵𝗼 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗹𝗲𝗮𝗿𝗻 𝗺𝗼𝗿𝗲 𝗮𝗯𝗼𝘂𝘁 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁.𝗗𝗼 𝘆𝗼𝘂 𝗹𝗶𝗸𝗲 𝘁𝗵𝗲 𝗱𝗼𝘄𝗻𝗹𝗼𝗮𝗱𝗮𝗯𝗹𝗲 𝗣𝗗𝗙 𝘃𝗲𝗿𝘀𝗶𝗼𝗻?👉 𝗖𝗼𝗺𝗺𝗲𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁 𝗶𝗻 𝗜 𝘄𝗶𝗹𝗹 𝘀𝗵𝗮𝗿𝗲 𝗱𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗹𝗶𝗻𝗸 𝗶𝗻 𝗻𝗲𝘅𝘁 𝟮𝟰 𝗵𝗼𝘂𝗿𝘀. 🧿 𝗛𝗲𝗿𝗲 𝗶𝘀 𝘄𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗖𝗵𝗲𝗮𝘁 𝗦𝗵𝗲𝗲𝘁 𝗶𝗻𝗰𝗹𝘂𝗱𝗲:▶️ Definitions of key terms▶️ Cash flow statement presentation▶️ Direct vs indirect cash flow method▶️ US GAAP comparison note▶️ 18 Cash flow drivers▶️ Cash flow vs EBIT▶️ Cash conversion cycle explained▶️ Cash flow in valuations▶️ 6 Cash flow forecast stepsStart collecting my cash flow materials and other resources.𝗛𝗲𝗹𝗽 𝗺𝗲 𝘀𝗽𝗿𝗲𝗮𝗱 𝘁𝗵𝗶𝘀 𝗙𝗥𝗘𝗘 𝗖𝗵𝗲𝗮𝘁 𝗦𝗵𝗲𝗲𝘁 𝘁𝗼 𝗵𝗲𝗹𝗽 𝗼𝘁𝗵𝗲𝗿𝘀.I missed something? Let me what you wouldadd, and I will approach that in the new version.👉 𝗟𝗶𝗸𝗲, 𝗖𝗼𝗺𝗺𝗲𝗻𝘁, 𝗥𝗲𝗽𝗼𝘀𝘁.-------------------------I am Bojan Radojicic Senior Partner in finance & tax international firm.➕ 𝗙𝗼𝗹𝗹𝗼𝘄 𝗺𝗲 for more finance, accounting, reporting, M&A, IFRS and valuation 𝗙𝗥𝗘𝗘 𝗿𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀.Ring the 🔔 at the right of my profile and don't miss my new posts.

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📊 Unlocking Financial Insights: EBITDA vs. Adjusted EBITDA 📊In the realm of finance, two terms frequently bandied about are EBITDA and Adjusted EBITDA. Let's embark on an exhilarating journey to unravel the distinctions between these metrics and their pivotal role in evaluating a company's financial prowess.🔍 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization):Picture this—EBITDA, a financial powerhouse! It showcases a company's operating profitability by stripping away interest expenses, taxes, depreciation, and amortization. This magical metric illuminates the core of a company's operations, making comparisons across entities and industries a breeze.📝 Adjusted EBITDA:But wait, there's more! Enter Adjusted EBITDA, the chameleon of financial metrics. It builds upon EBITDA's foundation and adapts to fit specific circ*mstances. This charismatic contender adjusts EBITDA further by excluding extraordinary expenses, one-time costs, stock-based compensation, or any other peculiar non-recurring items. By doing so, it paints a clearer picture of a company's ongoing performance, untangling the web of non-operational influences.📈 Key Differences:1️⃣ Inclusions and Exclusions: EBITDA discards interest, taxes, depreciation, and amortization, while Adjusted EBITDA takes it up a notch by shedding additional non-recurring or non-operational items.2️⃣ Comparability: EBITDA sets the stage for comparisons, focusing on the heart of operations. Adjusted EBITDA takes center stage by eliminating exceptional or one-time items, allowing for clearer cross-company and cross-industry evaluations.3️⃣ Decisive Insights: With Adjusted EBITDA in hand, you possess a finely-tuned lens through which to view a company's recurring earnings potential. It serves as your compass when making investment decisions, evaluating mergers and acquisitions, or exploring debt financing.💡 Keep in mind:While EBITDA and Adjusted EBITDA are veritable financial powerhouses, they have limitations. Both metrics fail to account for working capital changes, capital expenditures, and interest expenses. Therefore, it's paramount to embrace a holistic approach, considering these metrics alongside other financial indicators to form a comprehensive financial picture.🔎 So, my intrepid finance enthusiasts, unleash your financial prowess, armed with EBITDA and Adjusted EBITDA, to decode the secrets of success in the dynamic world of finance!#Finance #EBITDA #AdjustedEBITDA #FinancialInsights #Investing #BusinessPerformance #investment #success

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In this post, I'll be discussing the key factors that are crucial in preparing cash flow projection. Here's an in-depth explanation of how to prepare cash flow projection1. Collect Financial Data:Begin the process by gathering historical financial statements, including income statements, balance sheets, and cash flow statements.By analyzing this data, we can gain insights into the company's financial stability, profitability, and cash management.2. Analyze Historical Cash Flow:Closely review the historical cash flow patterns from the cash flow statement. They analyze the net cash provided or used by operating activities, investing activities, and financing activities over multiple periods. Understanding historical cash flow helps identify trends, seasonality, and the company's ability to generate cash from its core operations.3. Assess Sales and Revenue Growth:We analyze the company's sales pipeline, historical revenue growth rates, and market trends to estimate future cash inflows.Accurate revenue projections help determine the company's ability to generate sufficient cash to cover operating expenses and financing payments.4. Estimate Operating Expenses:We consider historical expense patterns, inflation rates, and the impact of any cost-saving initiatives. Accurate expense projections enable analysts to evaluate the company's ability to manage costs, maintain profitability, and generate positive cash flow from operations.5. Consider Working Capital Changes:We need to project changes in accounts receivable, accounts payable, and inventory levels to understand their impact on cash flow. For example, a lengthening collection period for accounts receivable may tie up cash, while extending payment terms with suppliers could improve cash flow.6. Project Financing Service Payments:We assess the company's financing schedule, profit rates, and the timing of principal payments. A company's ability to meet its financing obligations is critical for the banks and investors as it directly impacts cash flow stability and creditworthiness.7. Factor in Non-Cash Items:We take into account non-cash items like depreciation and amortization when projecting cash flow. While these expenses do not directly affect cash flow, they impact net income in the income statement. By adding back non-cash expenses to net income, analysts arrive at cash flow from operating activities.8. Validate Assumptions:Validating assumptions is a crucial step in cash flow projection to ensure its accuracy and reliability. We need to carefully review all assumptions made during the projection process, such as revenue growth rates, expense estimates, and working capital changes. We assess the reasonableness of these assumptions based on historical data, industry trends, and the company's business plans. By following these steps, it can enable informed business financing decisions.#creditanalyst #creditmanager #creditofficer #relationshipmanager #banking

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The most common Financial Statement Acronyms:·APIC – Additional Paid-In Capital·APR -Annual Percentage Rate·ARO -Asset Retirement Obligation·BPS -Basis Points·BOY -Balance of Year·CAGR -Compound Annual Growth Rate·CAPEX -Capital Expenditures·CF or SCF -Cash Flow Statement or Statement of Cash Flows·CFF -Cash Flow from Financing·CFI -Cash Flow from Investing·CFO -Cash Flow from Operations·COGS -Cost of Goods Sold·CWIP -Capital Work in Progress·CY or CP -Current Year or Current Period·D&A -Depreciation and Amortization·DCF -Discounted Cash Flow·DSCR -Debt Service Coverage Ratio·EBIT -Earnings Before Interest and Taxes·EBITDA -Earnings Before Interest, Taxes, Depreciation, and Amortization·EBT -Earnings Before Tax·EPS -Earnings Per Share·EPV -Earnings Price-to-Value Ratio·FCF -Free Cash Flow·FIFO -First-In, First-Out·FMV – Fair Market Value·FV -Fair Value·FYE -Fiscal Year End·FY -Full Year·GOP -Gross Operating Profit·GP -Gross Profit·IAS -International Accounting Standard·IFRS -International Financial Reporting Standards·IPO -Initial Public Offering·IRR -Internal Rate of Return·LIFO -Last-In, First-Out·LRD -Listed Regulatory Document·LTD -Long-Term Debt·M&A -Mergers and Acquisitions·MTD -Month-to-Date·NAV -Net Asset Value·NBV -Net Book Value·NCI -Non-Controlling Interest·NPV -Net Present Value·NWC -Net Working Capital·OCI -Other Comprehensive Income·OE -Owner’s Equity·OPEX -Operating Expenses·P&L -Profit and Loss Statement ·PN -Promissory Note ·P&O -Purchase and Sale of Securities·P/E -Price-to-Earnings Ratio·PPE -Property, Plant, and Equipment·PPA -Prior Period Adjustment·PY -Prior Year·QTD -Quarter-To-Date·RE -Retained Earnings·ROA -Return on Assets·ROE -Return on Equity·ROIC -Return on Invested Capital·SCF -Statement of Cash Flows·SCI -Statement of Comprehensive Income·SOFP -Statement of Financial Position·SOCE -Statement of Changes in Equity·SOFR -Secured Overnight Financing Rate·SG&A -Selling, General, and Administrative Expenses·T/A -Total Assets·T/B -Trial Balance·T/L -Total Liabilities·T&E -Travel and Entertainment·VAT -Value Added Tax·WACC -Weighted Average Cost of Capital·WC -Working Capital·YOY -Year on Year·YTD -Year-To-Date.#copied

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The most common Financial Statement Acronyms:·APIC – Additional Paid-In Capital·APR -Annual Percentage Rate·ARO -Asset Retirement Obligation·BPS -Basis Points·BOY -Balance of Year·CAGR -Compound Annual Growth Rate·CAPEX -Capital Expenditures·CF or SCF -Cash Flow Statement or Statement of Cash Flows·CFF -Cash Flow from Financing·CFI -Cash Flow from Investing·CFO -Cash Flow from Operations·COGS -Cost of Goods Sold·CWIP -Capital Work in Progress·CY or CP -Current Year or Current Period·D&A -Depreciation and Amortization·DCF -Discounted Cash Flow·DSCR -Debt Service Coverage Ratio·EBIT -Earnings Before Interest and Taxes·EBITDA -Earnings Before Interest, Taxes, Depreciation, and Amortization·EBT -Earnings Before Tax·EPS -Earnings Per Share·EPV -Earnings Price-to-Value Ratio·FCF -Free Cash Flow·FIFO -First-In, First-Out·FMV – Fair Market Value·FV -Fair Value·FYE -Fiscal Year End·FY -Full Year·GOP -Gross Operating Profit·GP -Gross Profit·IAS -International Accounting Standard·IFRS -International Financial Reporting Standards·IPO -Initial Public Offering·IRR -Internal Rate of Return·LIFO -Last-In, First-Out·LRD -Listed Regulatory Document·LTD -Long-Term Debt·M&A -Mergers and Acquisitions·MTD -Month-to-Date·NAV -Net Asset Value·NBV -Net Book Value·NCI -Non-Controlling Interest·NPV -Net Present Value·NWC -Net Working Capital·OCI -Other Comprehensive Income·OE -Owner’s Equity·OPEX -Operating Expenses·P&L -Profit and Loss Statement ·PN -Promissory Note ·P&O -Purchase and Sale of Securities·P/E -Price-to-Earnings Ratio·PPE -Property, Plant, and Equipment·PPA -Prior Period Adjustment·PY -Prior Year·QTD -Quarter-To-Date·RE -Retained Earnings·ROA -Return on Assets·ROE -Return on Equity·ROIC -Return on Invested Capital·SCF -Statement of Cash Flows·SCI -Statement of Comprehensive Income·SOFP -Statement of Financial Position·SOCE -Statement of Changes in Equity·SOFR -Secured Overnight Financing Rate·SG&A -Selling, General, and Administrative Expenses·T/A -Total Assets·T/B -Trial Balance·T/L -Total Liabilities·T&E -Travel and Entertainment·VAT -Value Added Tax·WACC -Weighted Average Cost of Capital·WC -Working Capital·YOY -Year on Year·YTD -Year-To-Date.#fianance #acccounting #cma #financialaccounting #ima #accountancy #analytics

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Guidepost to,running a business or after starting a new one. Will adopt this.

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