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Accounting vs. Finance KPIs Here's why you need both. 🎯 Finance KPIs >>> focus on the business financial performance >>> help assess value creation by measuring financial health, ability to generate profits and ability to manage capital appropriately ⚫Key Finance KPIs include: 1. Profitability Metrics: - Earnings Per Share (EPS): Profitability metric based on the number of outstanding shares. - Return on Equity (ROE): Profit generation from shareholders' equity. - Return on Assets (ROA): Asset efficiency in terms of profitability. 2. Valuation Metrics: - Price to Earnings Ratio (P/E Ratio). - Dividend Payout Ratio 3. Liquidity Metrics: - Cash Flow Margin - Cash Debt Service Coverage 4. Capital Efficiency Metrics: - Return on Invested Capital (ROIC): Efficiency in using capital to generate profits. - Free Cash Flow (FCF): Cash available cash for servicing debt, reinvestment in the business and capital distributions. 5. Value creation: - Weighted Average Cost of Capital (WACC): Average return rate needed to satisfy all investors. - Economic Value Added (EVA): Economic profit that considers both earnings and the cost of capital. 🎯 Accounting KPIs >>> focus on the day-to-day operations >>> help measure and monitor financial operation efficiency, and the effectiveness of assets, liabilities, and cash flow management 🟡 Key Accounting KPIs include: 1. Liquidity Metrics: - Current Ratio - Quick Ratio (Acid-Test Ratio) 2. Efficiency Metrics: - Accounts Receivable Turnover: How effectively a company is managing its accounts receivables and collections. - Inventory Turnover: How many times a company's inventory is sold and replaced over a period. - Accounts Payable Turnover: How quickly a company pays off its suppliers. 3. Operational Performance Metrics: - Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO) - Days Inventory Outstanding (DIO) 4. Profitability Metrics: - Gross Profit Margin - Net Profit Margin - Break-even Point 🎯 So why do you need both Finance & Accounting KPIs? Because together they are essential for a comprehensive view of any business: ⚫ finance KPIs for strategic decision-making 🟡 accounting KPIs for operational excellence What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

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. ➡️ Start with PESTEL Analysis - Scan your macro environment. - Evaluate political, economic, and other pivotal factors. - Assess broad influences that can shape your business direction. ➡️ Dive into Porter's Five Forces - Analyze your competitive landscape. - Understand the power dynamics between you and your suppliers and buyers. - Recognize the threats of new entrants and substitute products. ➡️ Unpack your SWOT - Examine your organization's internal strengths and weaknesses. - Identify external opportunities and threats informed by PESTEL and Porter's insights. - Develop strategies that build on your strengths and address your weaknesses. ➡️ Consolidate with Value Chain Analysis - Break down your company's core activities. - Determine where you add the most value and where inefficiencies exist. - Align your insights from PESTEL, Porter's, and SWOT to optimize your value chain. ➡️ Formulate your Strategy - Categorize products/business units and allocate resources strategically with the BCG Matrix - Evaluate growth strategies (Market Penetration, Product Development, Market Development, Diversification) and decide on your ideal direction with the Ansoff Matrix ➡️ Implement and Monitor - Implement and monitor strategy while balancing financial, customer, internal process, and learning & growth perspectives with the help of the Balanced Scorecard (BSC) What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

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. 2// Budgeting and Forecasting 🎯 Create and manage a budget, and forecast future financial performance to anticipate risks and opportunities, make informed decisions and ensure the long-term profitability of your company or unit. 3// Break-even analysis (B/E) 🎯 Determine the point at which your company's revenues will equal its costs to identify when the your company will become profitable. 4// Cost-Volume-Profit (CVP) Analysis 🎯 Understand how changes in costs, volume, and price will impact your company's profitability. 5// Capital Budgeting (NPV, ROI) 🎯 Evaluate and select long-term investments in new equipment and facilities to optimize performance and ensure your company's continued growth and profitability. 6// Working Capital Management (W/C) 🎯 Balance collections, inventory stocks and payments to reduce your Cash Conversion Cycle without damaging client and supplier relationships, and without foregoing sales opportunities. 7// Financial Ratio Analysis 🎯 Calculate and interpret critical financial ratios (liquidity ratios, profitability ratios, debt service ratios and solvency ratios) to get insight into different aspects of your company's financial health. 8// Performance management 🎯 Establish goals, monitor progress, and provide feedback to align employee and organizational goals and increase your effectiveness as a manager. 9// Risk Management 🎯 Identify and manage financial risks (credit risk, market risk, and liquidity risk) and their impact on your company performance. 10// Leverage/Service/Coverage 🎯 Make informed decisions about both debt and equity financing to ensure your company has the appropriate funding and capital structure to support growth. 11// Performance Metrics (KPIs) 🎯 Monitor and manage profitability and cash alongside other relevant metrics like production efficiency, quality costs or customer net promoter score. 12// Business/Unit/Asset Valuation 🎯 Understand valuation drivers at the asset, unit/division and business levels to impact them effectively. What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

What Drives Your Revenue? → Three Things: 1. Sales Volume: the number of units sold 2. Sales Price: the selling price for the units sold 3. Sales Mix: the combination of sold product volumes and sales prices 🎯 Here's how you can impact each of these factors to increase Revenues. ⚫ How to impact Sales Volume: ✓ Increase demand to increase New Client Acquisition: implement targeted marketing efforts to increase brand awareness and attract new customers ✓ Improve and expand products/services: enhance existing offerings to stimulate customer contract renewals. ✓ Expand markets: expand offerings to capture new market, industry or geography segments ✓ Optimize inventory management: implement efficient inventory control systems and avoid stockouts or overstocking ✓ Inbound referrals: encourage customers and strategic partners to refer new clients through referral programs or word-of-mouth ✓ Net Promoter Score: track and improve customer satisfaction and loyalty to increase repeat business, referrals, and sales volumes ➡️ Use Volume to calculate Sales Volume Variances = (Actual Units Sold - Budgeted Units Sold) x Budgeted Price per Unit ⚫ How to impact Sales Price: ✓ Increase Pricing: review and increase prices to reflect changes in production costs, market conditions, and customer preferences ✓ Bundle Pricing: offer product or service bundles at a discounted rate, encouraging customers to purchase multiple items and thereby increasing overall revenue ✓ Value Pricing: set prices based on perceived customer value rather than solely based on production costs ✓ Premium pricing: position premium products or services with higher price points for customers willing to pay more for luxury offerings ✓ Cost management: monitor production costs and improve operational efficiency to maintain competitive pricing without sacrificing profit margins ➡️ Use Price to to calculate Sales Price Variances = (Actual Price - Budgeted Price) x Actual Units Sold ➡️➡️ Use Price and Volume to calculate Sales Mix Variances = (Actual Units Sold – Budgeted Units Sold) × Budgeted Contribution Margin 🎯 Remember that Revenue growth is one of the 3 main drivers of Operating Cash Flow growth. OCF = Revenue -Expenses -Depreciation and Amortization +/-Other non-cash items (e.g. gains/losses on assets sales) +/ Changes in Working Capital 🎯 And Operating Cash Flow drives your sustainable business growth. What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

The 7 Cost Drivers every manager should understand. Costs can be within your control (internal) or outside your control (external). 💎Download my exclusive strategic finance cheat sheet here: https://bit.ly/4cW2fxd 🎯 Your internal cost drivers are within the control of your business, and you can influence them through your operations and management practices. 🎯 Prioritize these drivers to improve your cost structure and competitiveness ☑️ Internal cost drivers include: volume, efficiency, process improvements, and quality. 🎯 Your external cost drivers are outside the direct control of your business, and they are influenced by external market conditions, such as supply and demand, commodity prices, and regulatory requirements. 🎯 Monitor these drivers and adapt your strategy as necessary to respond to market conditions. ☑️ External cost drivers include: material costs, labor costs, and overhead costs. Here’s how you can use each of these 7 drivers to positively impact your Costs: 1️⃣ Volume 🎯 Increase production volumes to take advantage of economies of scale 🎯 Implement just-in-time (JIT) inventory system to reduce inventory costs 🎯 Consolidate your production facilities to reduce fixed costs 2️⃣ Efficiency 🎯 Reduce your cycle time by implementing lean manufacturing processes 🎯 Improve your product design to reduce waste and scrap 3️⃣ Process improvements 🎯 Streamline your workflows and eliminate non-value-added activities 🎯 Invest in technology to automate your manual processes 🎯 Implement kaizen (continuous improvement) programs to drive process improvements 4️⃣ Quality 🎯 Implement quality control procedures to reduce defects and scrap 🎯 Improve your product design to reduce rework and warranty costs 🎯 Invest in employee training to improve product quality and performance 5️⃣ Material costs 🎯 Source materials from lower-cost suppliers or secure bulk discounts 🎯 Optimize material usage through better inventory management and production planning 🎯 Explore alternative materials or substitutes to reduce your costs 6️⃣ Labor costs 🎯 Cross-train your employees to improve flexibility and reduce overtime costs 🎯 Improve your employee retention and engagement to reduce your turnover costs 🎯 Use temporary or contract labor to supplement your permanent staff during peak demand times 7️⃣ Overhead costs 🎯 Reduce your energy consumption through the use of energy-efficient equipment and lighting 🎯 Outsource your non-core functions to reduce fixed overhead costs 🎯 Implement a telecommuting program to reduce your office space costs What would you add? --------------------- ➡️ Watch my free strategic cash flow webinar: https://bit.ly/49n7Lqh ➡️ Grow your skills with my 5* courses, checklists and cheat sheets ➡️ Join 45,000+ subscribers here: https://bit.ly/3T3CtPm ➡️ Follow to grow your influence with strategic finance ♻️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 if you found this valuable.

EBITDA gets adjusted all the time. But Adjusted EBITDA is still not cash. Here are the 20 most common adjustments to be aware of: 1// Provisions and Reserves Guarantees. Future tax obligations. Asset Retirement Obligations. Asset impairment. 🎯 These are potential future cash payment obligations, but while they shouldn’t reduce your current EBITDA, the future changes in their associated balance sheet accounts might. 2// Non-operating income 🎯 This is usually passive income which isn’t related to your company’s core operations. 🎯 If your company isn’t actively in the business of generating that income, it shouldn’t be part of your EBITDA. 3// Unrealized gains or losses 🎯 These are increases or decreases in the value of an asset or a liability that you haven’t yet sold or settled. 🎯 Paper gains and losses don’t belong in EBITDA. 4// One-time revenue or expenses 🎯 These are the result of non-recurring transactions. 🎯 If they aren’t repeatable and the objective is to assess the economic value of recurring cash flows, they may not belong in EBITDA. 5// Foreign exchange gains or losses 🎯 These may be the result of foreign exchange transactions outside your company’s core operations. 🎯 Alternatively, if your business is carried out in international markets, FX gains and losses definitely belong in your company’s EBITDA. 6// Goodwill impairment 7// Asset write-downs 8// Litigation or insurance expenses outside the regular course of business. 🎯 These are the result of non-recurring transactions such as one-time lawsuits, large financing deals or outlier commercial contracts. 9// Excessive Owner compensation 10// Share-based compensation 11// Below Market Compensation 12// Personal Expenses 13// Personal Travel and Entertainment Expenses 14// Pension Expenses 15// Professional Fees 16// Aggressively expensed/capitalized items 17// Fair Market Rent 18// Tax Minimization Strategies 19// Severance Costs 20// Percentage Of Completion Revenues 🎯 This includes the revenues you recognized on long-term contractual engagements based on the percentage of costs incurred relative to the total estimated contractual costs. 🎯 Your high interim EBITDA on Percentage of Completion contracts is always at risk of reversing into losses resulting from underestimated project costs. What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

Are you a CFO? Do you want to become one? Then you’ll need to master Financial Management. Here is a strategic checklist across 15 key areas of the CFO role, to help you stay on track. 1. Budgeting and Forecasting 2. Cash Flow Management 3. Financial Analysis 4. Working Capital Management 5. Capital Structure 6. Risk Management 7. Tax Planning 8. Financial Reporting 9. Cost Accounting 10. Investment Evaluation 11. Financial Planning 12. Mergers and Acquisitions (M&A) 13. ESG-Driven Financial Management 14. People Management and Leadership 15. Technology and Digital Transformation What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

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 . 1// Margin (or Gross Profit Margin in this case) is the proportion of a product’s Sales Price that exceeds the Product Cost. ☑️ Margin = (Product Sales Price - Product Cost)/ Product Sales Price ☑️ Margin = Gross Profit per Product / Product Sales Price x 100 Note that Margin is calculated as a percentage. Meanwhile, Gross Profit is calculated as an amount. 2// Markup is the proportion by which you increase the Product Cost to arrive at the Sales Price. ☑️ Markup = (Product Sales Price - Product Cost)/ Product Cost ☑️ Markup = Gross Profit per Product / Product Cost x 100 Markup can be calculated based on a product's variable cost or based on its total (absorption) cost. ☑️ Marking up the variable cost could result in under costing and underpricing the product, which in turn may increase revenues at the expense of reduced profitability and cash flows. 💎 Use Cost-Volume-Profit analysis to determine the number of units you will need to sell to break even. ☑️ Marking up the absorption cost could result in over costing and overpricing, which in turn could reduce revenues also at the expense of reduced profitability and cash flows. 💎Be careful with the fixed manufacturing depreciation expense which gets included in the full/absorption cost of a product. 🎯 To calculate your margin if you know your markup: ☑️ Margin = Markup /(1+Markup) 🎯 To calculate your markup if you know your margin: ☑️ Markup = Margin / (1-Margin) 🎯 How to use Margin and Markup: ☑️ Both Margin and Markup calculate the difference between price and cost. ☑️ Margin relates that difference to Price or Revenue. ☑️ Markup relates that difference to Cost. ☑️ If you know the Product Cost, use Markup to determine an appropriate selling Price. ☑️ If you know the Product Gross Profit, use it to determine the Gross Profit Margin and track profitability over time. What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

14 Types of Costs you Should Know 🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗥𝗲𝗹𝗲𝘃𝗮𝗻𝗰𝗲 𝘁𝗼 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗠𝗮𝗸𝗶𝗻𝗴 - Relevant/Incremental Costs: Future costs that are relevant to decision-making - Irrelevant/Sunk Costs: Past costs that are irrelevant to decision-making 🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗙𝘂𝗻𝗰𝘁𝗶𝗼𝗻 - Product Costs: Inventoried costs associated with the production of products or services - Period Costs: Costs not related to production and expensed in the period - Manufacturing Costs: total costs associated with the production of goods, including direct materials, direct labor, and manufacturing overhead - Operating Costs: total costs associated with day to day operations - Conversion Costs: costs incurred when converting raw materials into finished products - Overhead Costs: indirect costs not tied to a specific product or service, often including items like rent, utilities, and administration costs (can be manufacturing or non-manufacturing) 🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗧𝗿𝗮𝗰𝗲𝗮𝗯𝗶𝗹𝗶𝘁𝘆 - Direct Costs: Costs that can be traced directly to a specific cost object - Indirect Costs: Costs that cannot be traced directly to a specific cost object 🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗕𝗲𝗵𝗮𝘃𝗶𝗼𝗿 - Fixed Costs: Costs that remain constant regardless of the level of production or services - Variable Costs: Costs that vary in direct proportion to the level of production - Semi-variable Costs/Mixed Costs: Costs that contain both fixed and variable components - Step Costs: Costs that remain fixed only for a certain volume or range of activity 𝗕𝗢𝗡𝗨𝗦: 🎯 Economic Costs: the total cost of producing your goods or services, including both explicit costs (such as wages and materials) and implicit costs (such as opportunity costs). 🎯 Allocated Costs: indirect costs that you cannot directly trace to a specific product or service, and which you instead distribute to products based on a pre-determined method ideally driven by a cause-effect relationship What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

EBIT vs. EBITDA It's All About The Depreciation and Amortization ➡ Download my 30-point cash flow checklist and start making better strategic business decisions : https://bit.ly/4fp2eUr Here’s what you need to know if you’re looking to analyze your operating profitability: ➡️ EBIT answers “What’s the operating profit excluding interest and tax costs?” ➡️ EBITDA answers “What’s the operating profit excluding not only interest and taxes but also depreciation and amortization?” $ EBIT represents the operating earnings of the company before being influenced by financing and tax decisions. $$ EBITDA represents the operating earnings before influence from the company’s financing and investing decisions, and before accounting for any tax circumstances, providing an easier way to compare and potentially gauge operating profitability among companies. 🎯 Earnings Before Interest and Taxes (EBIT) Measures profitability, including all operating expenses like depreciation and amortization, but excluding the effects of debt structure and tax rates. ➡️ Pros: Provides a clear view of operational profitability by excluding interest and taxes, enabling comparisons across companies regardless of their financing and tax situations. ➡️ Cons: Does not account for the cost of debt, as it excludes interest expenses, which can be significant for companies with high levels of debt. Doesn’t provide a full financial picture in isolation, as it omits tax implications, which can vary widely between regions and affect net profitability. 🎯 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Adjusts EBIT to exclude depreciation and amortization expenses. Calculates EBITDA as EBIT plus depreciation and amortization. Used to compare profitability across companies that might have different levels of investment in fixed assets. Valuable in high asset industries like manufacturing and telecommunications. ➡️ Pros Offers a clean measure of operating cash flow independent of investing, financing, tax strategies. Widely used in valuations and investment comparisons. ➡️ Cons Can mask the impact of needed capital expenditures. May inflate operating profitability leading to potentially misleading financial analysis. What would you add? --------------------- ➡️ Watch my free strategic cash flow webinar: https://bit.ly/49n7Lqh ➡️ Grow your skills with my 5* courses, checklists and cheat sheets ➡️ Join 45,000+ subscribers here: https://bit.ly/3T3CtPm ➡️ Follow to grow your influence with strategic finance ♻️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 if you found this valuable.