Where chemistry meets profitability 🧪 Check out these financial elements 👇 | Josh Aharonoff, CPA posted on the topic | LinkedIn (2024)

Periodic Table of Financial Metrics a nice presentation and brilliant insight, take a look into it.

Financial Analysis CourseI'll teach you how to analyze a• Balance sheet• Income Statement• Cash Flow StatementIn 2 minutes:1️⃣ Balance sheetA balance consists of the following elements:• Current Assets• LT Assets• Current Liabilities• LT Liabilities• Shareholders EquityIt shows you what the company owns and owes.This statement is based on a simple formula:Assets = Liabilities + Equity2️⃣ Income StatementAn income statement shows you the income and expenses of a company.Revenue- COGS= Gross Profit- Operating Expenses= Operating Income- Non-Operating Income/Expenses= Pre-Tax Income- Taxes= Net Income3️⃣ Cash Flow StatementThe Cash Flow Statement consists of 3 elements:• Cash Flow from Operating Activities• Cash Flow from Investing Activities• Cash Flow from Financing ActivitiesIt shows you the cash that enters and leaves a company.Cash Flow from Operating ActivitiesNet Income+ Non-Cash Changes+/- Changes in Working Capital= Cash Flow from OperationsCash Flow from Investing Activities- Capital Expenditures- Acquisitions+ Proceeds from the sale of investments= Cash Flow from InvestmentsCash Flow from Financing Activities+/- Borrow/Repay Debt+/- Issue/Repurchase of stocks- Pay Dividends= Cash Flow from Financing 📚 Download the course in high resolution here: https://lnkd.in/eb6UJGXx

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Financial Statement RatiosWant to master accounting? Study these formulas:1️⃣ LIQUIDITY▪️Current Ratio: Current Assets / Current Liabilities▪️New Working Capital: Current Assets - Current Liabilities▪️Quick Ratio: Cash + Marketable Securities + Receivables / Current Liabilities2️⃣ LEVERAGE▪️Times Interest Earned: Earnings Before Interest & Taxes / Interest Expense▪️Debt To Equity Ratio: Total Liabilities / Stockholders' Equity▪️Debt Ratio: Total Debt / Total Assets3️⃣ PROFITABILITY▪️Return on Total Assets: Net Income / Average Total Assets▪️Return on Common Equity: Net Income / Common Equity▪️Profit Margin: Net Income / Net Sales▪️Gross Profit Margin: Gross Profit / Net Sales4️⃣ ACTIVITY▪️Accounts Receivable Turnover: Net Credit Sales / Average Accounts Receivable▪️Average Collection Period: 365 / Average Receivable Turnover▪️Total Asset Turnover: Net Sales / Average Total Assets▪️Inventory Turnover: Cost of Goods Sold / Average Inventory▪️Average Age of Inventory: 365 / Inventory Turnover 5️⃣ MARKET VALUE▪️Earnings Per Share: Net Income - Preferred Dividends / Common Stock▪️Book Value Per Share: Stockholders' Equity - Preferred Stock / Common Stock▪️ Price to Earnings Ratio: Market Price Per Share / Earnings Per Share▪️ Price to Sales Ratio: Market Price Per Share / Sales Per Share▪️ Dividend Yield: Dividend Per Share / Market Price Per Share▪️ Free Cash Flow Yield: Free Cash Flow Per Share / Market Price Per ShareWhat ratio did I miss? Let me know below! ***📌 P.S. Want to go deeper into analyzing financial statements? Join me for a FREE webinar TODAY (Thursday, Oct 12th).Topic: How to analyze unprofitable business.RSVP here: https://lnkd.in/eMeJWmPSCan't make the live event? RSVP and you'll be sent a replay.➕ Follow me Brian Feroldi for more content like this.If you liked this post, please repost ♻️ to share it with your network.

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A concise and comprehensive overview of financial statement ratios!👍 #business #accounting #financialstatement

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Good summary of financial ratios that can help you laser focus on inefficiencies, and what is working well for you.

Unlocking Profitability: The Significance of Gross Margin Analysis and its Calculation Methods

𝐈𝐧 𝐭𝐡𝐞 𝐰𝐨𝐫𝐥𝐝 𝐨𝐟 𝐦𝐚𝐭𝐡𝐞𝐦𝐚𝐭𝐢𝐜𝐬, 𝐫𝐚𝐭𝐢𝐨𝐬 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐩𝐨𝐞𝐭𝐫𝐲 𝐨𝐟 𝐥𝐨𝐠𝐢𝐜𝐚𝐥 𝐢𝐝𝐞𝐚𝐬Lets continue our ratio analysis ( Ratio - 2 of 8)𝟐. 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐑𝐚𝐭𝐢𝐨𝐬Financial metrics that measure a company's ability to generate earningsTYPES𝟐.𝟏. 𝐌𝐚𝐫𝐠𝐢𝐧 𝐑𝐚𝐭𝐢𝐨𝐬Financial metrics that assess the relationship between a company's earnings and its salesGross MarginPercentage of revenue exceeding the cost of goods soldEBITDA MarginPercentage of revenue remaining after deducting operating expenses, excluding interest, taxes, depreciation, and amortizationEBIT MarginPercentage of revenue remaining after deducting all operating expenses, excluding interest and taxesEBT MarginPercentage of revenue remaining after deducting operating expenses and interest but before taxesNet Profit MarginPercentage of revenue remaining as net profit after deducting all operating expenses, interest, taxes, and other costsANALYSISGross MarginThe gross margin of the company has consistently remained around 18–19%. However, there was a significant jump in FY23, where gross margin grew by more than 100% and reached 41.13%, which is exceptional.EBITDA MarginThe firm has remained on average at about 17.02%. Even after a substantial jump in gross margin in FY23, EBITDA margins remained the same due to a more than 600% increase in SG&A expenses, which might be a red flag on how efficiently the company is running its operationsEBIT MarginThe EBIT margin of the company follows a similar trend and has a 10Y average of 15.20%EBT MarginThe EBT margin also follows the same trendNet Profit Margin10Y net profit of the company is around 10.70% with a slight dip in FY20. Currently the net profit margin is witnessing a gain of around 2% from FY 21𝟐.𝟐. 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐂𝐚𝐬𝐡 𝐟𝐥𝐨𝐰 𝐫𝐚𝐭𝐢𝐨 (𝐂𝐅𝐎)A financial metric that measures a company's ability to generate cash from its core operating activities in relation to its salesCFO/SalesProportion of revenue converted into operating cash flowCFO/Total AssetsEfficiency of cash generation relative to total assetsCFO/Total DebtAbility to generate cash from operations compared to total debt.ANALYSISCFO/SalesThe CFO/sales ratio for the firm has been around 6.13% on an average 10Y which is not a very good sign considering that a CFO/sales ratio of above 10% is considered good and that company is not able to convert its sales into hard cashCFO/Total AssetsThe 10Y CFO/total assets are around 5.07%. The industry standard says that the company should have at least 30% of this ratio; hence, this can be seen as another red flag pointing to a low conversion rate.CFO/Total DebtThe firm didn't have any debt until FY19, after which it was significantly high, which means that the cash flows generated are adequate for the firm to remain solvent.To be cont.Like 👍 if you learnt something𝐀𝐃𝐈𝐎𝐒 🚀

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To make Sensitivity Analysis, Scenario Analysis, M&A Model, DCF Model and make your Financial Analysis, first you should build a Linked 3-Statement Model.How to build a 3-Statement Financial Model❓Corporate Finance Institute® (CFI)in the link below illustrates everything related to building a 3-statement Financial Model. The steps to build a 3-Statement Financial Model are:1️⃣ Input historical financial information into Excel.2️⃣ Determine the assumptions that will drive the forecast.3️⃣ Forecast the income statement.4️⃣ Forecast long-term, capital assets.5️⃣ Forecast financing activity (e.g., debt and equity).6️⃣ Complete the income statement.7️⃣ Complete the balance sheet (excluding cash).8️⃣ Complete the cash flow statement and cash on the balance sheet.Now a big concern in budgeting is calculaing the Cost of Goods Sold (CGS), to calculate it you first need to determine how much DM to purchase, so we must go through this process:#️⃣ Sales Volume ➕ Ending inventory (FG) ➖ Beginning Inventory (FG) = Production Volume.#️⃣ Production Volume ➕ Ending inventory (DM) ➖ Beginning Inventory (DM) = DM to purchase.#️⃣ DM to purchase volume ✖️ Standard cost = DM to purchase in $.#️⃣ DL Budget: DLH in $ ✖️ Number of Hours ✖️ Number of Units.#️⃣ MOH budget: Simply estimate the budgeted MOH costs (IM, IL, Utilities and fixed Indirect costs like: Depreciation, Property taxes, Insurance, Salaries).#️⃣ Now Budgeted DM ➕ DL ➕ MOH = CGM.CGM ➕ Beginning FG - Ending FG = CGS.DM: Direct Materials.DL: Direct Labor.MOH: Manufacturing Overhead.FG: Finished Goods.DLH: Direct Labor per Hour.MOH: Manufacturing Overhead.IM: Indirect Materials.IL: Indirect Labor.CGM: Cost of Goods Manufactured.#budgeting#financial_modeling#3_statement_financial_modeling#financial_analysis#cgs#cgmhttps://lnkd.in/dvNhYQ5B

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7 Simple Steps to Forcast Financial Statements

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📊 Navigating the Impact of Credit Sales on Financial Statements 📈In the intricate world of finance, understanding the journey of a sale on credit through the financial statements is pivotal. For reasons of simplification, we consider that company is not payer of VAT. Drawing inspiration from Joshua Waitzkin's book "Art of Learning," which emphasizes learning from the "little" to the "big," let's delve into this process. 📌 From Sales Journal to Financial Statements:1️⃣Begins in the sales journal.2️⃣Transitions to the general ledger and systematic evidence.3️⃣Culminates in synthetic evidence, followed by the big book and trial balance.📌 The Impact on Financial Statements:📊 Balance Sheet: Reflects an increase in assets (accounts receivable) and equity due to the rise in revenues.📈 Profit & Loss Account: Showcases the uptick in revenues.💰 Cash-flow Statements: No immediate impact since cash hasn't been received.💼 Own-Capitals Statement: Signals growth in the company's value and, by extension, the shareholders' stake.📝 Notes at Financial Statements: Potential for added insights like turnover by segments and details on affiliated transactions.🔍 In the next post, we will see the impact of an invoice of sell on credit on the SAF-T declaration. Stay tuned for more insights! 💡#FinancialStatements #CreditSales #AccountingInsights #BalanceSheet #ProfitAndLoss #CashFlow #SAFT #LinkedInFinance