AI for Finance • Data Studios

|| RELATED ACCOUNTS IN REVENUE RECOGNITION || •••••••• 👉Check out our Full Guide to Financial Analysis and Management: geni.us/finances ✦ ACCOUNTS RECEIVABLE → Records revenue earned but not yet collected from customers ✦ UNEARNED REVENUE → Represents payments received for goods or services not yet delivered ✦ CONTRACT ASSETS → Captures revenue earned but not yet billed when performance obligations are met ✦ SALES DISCOUNTS & ALLOWANCES → Tracks adjustments for early payment discounts, product returns, or price reductions ✦ COST OF GOODS SOLD → Reflects the direct costs associated with generating recognized revenue ✦ SALES TAX PAYABLE → Represents tax collected on behalf of the government, not part of revenue ✦ CONTRACT LIABILITIES → Records obligations when a customer prepays but revenue is not yet recognized ✦ DEFERRED COMMISSIONS → Capitalizes sales commissions and amortizes them over the contract term ••••••• 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances ➕️ More at www.datastudios.org

EXAMPLE OF BALANCE SHEET FOR 4 COMPANIES UNDER CERTAIN CONDITIONS⬇️ •••••••• 👉Discover advanced Financial Analysis and Management tips in our Guide: geni.us/finances ✦ Financially Healthy → Strong liquidity, low debt, and growing equity; current assets exceed liabilities; retained earnings are positive; diversified assets ensure stability and resilience; ✦ Overleveraged → Excessive debt burden with a high debt-to-equity ratio; heavy interest payments reduce profitability; limited financial flexibility increases default risk; ✦ Liquidity Crisis → Cash reserves are critically low; current liabilities exceed current assets; difficulty converting assets into cash leads to delayed payments and operational risks; ✦ Technically Insolvent → Liabilities exceed assets, resulting in negative equity; high default risk with limited recovery options; potential bankruptcy without restructuring or external intervention. •••••••• 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances AI for Finance • Data Studios ➕️ More at www.datastudios.org

7 ways EBITDA can mislead you: •••••••• 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances 1) It’s Not Standardized Different companies include or exclude various expenses in “Adjusted EBITDA” For example, Company A removes $200,000 in “special” costs and shows $1.5 million EBITDA. Company B keeps similar costs in and shows $1 million EBITDA. The numbers look different even though both face the same expense type. 2) It Hides Recurring Costs Depreciation and amortization are not just “paper” expenses; they show that assets wear out over time. For example, a factory’s machines cost $200,000 a year to replace. If you only look at EBITDA, you might see $1 million profit, but you ignore the $200,000 needed regularly to keep operations running. 3) It Overlooks the Cost of Debt EBITDA does not subtract interest payments. For example, a business reports $2 million EBITDA but pays $600,000 each year in interest on loans. That’s a 30% chunk of its operating earnings gone right away, which EBITDA does not reflect. 4) It Masks One-Time Hits Companies can label certain expenses as “one-time” or “non-recurring” and exclude them. For example, a firm reports $500,000 EBITDA by removing $400,000 of restructuring costs. Realistically, if these costs happen every year, the true profit is much lower. 5) It Ignores Future Investment Slashing R&D or maintenance can make current EBITDA look higher but harm future growth. For example, a tech startup shows $1 million EBITDA but cut its $500,000 R&D budget this year. Without new product development, future profits may suffer. 6) It Doesn’t Measure Revenue Quality A sales boost may increase EBITDA, but if those sales are not long-lasting, the gain is temporary. For example, a streaming service offers a big discount, doubling EBITDA from $200,000 to $400,000. After the discount ends, half the new subscribers quit, so real income drops again. 7) It Lacks Proper Context A single EBITDA number doesn’t reveal profit margins or compare to company size. For example, a Company A has $3 million EBITDA on $10 million revenue (30% margin). Company B also has $3 million EBITDA, but on $5 million revenue (60% margin). Without looking at margins, you’d never know B is more efficient. •••••••• 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances AI for Finance • Data Studios ➕️ More at www.datastudios.org

👉Check out our Full Guide to Financial Analysis & Management: geni.us/finances ➕️ More at www.datastudios.org 🔔Follow AI for Finance • Data Studios

👉Check out our Full Guide to Financial Analysis & Management: geni.us/finances ➕️ More at www.datastudios.org 🔔Follow AI for Finance • Data Studios

👉Check out our Full Guide to Financial Analysis & Management [500+ pages]: geni.us/finances ➕️ More at www.datastudios.org 🔔Follow AI for Finance • Data Studios

Expense vs Expenditure...⬇️ •••••••• 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances AI for Finance • Data Studios ➕️ More at www.datastudios.org

Asking some popular AI chatbots a simple question... Let's see which model may cause trouble! •••••••• 👉Check out the ChatGPT intensive 1-hour video course: geni.us/chatgptcourse More at www.datastudios.org AI for Finance • Data Studios

CHATGPT NEW FUNCTIONALITY: "USE MORE INTELLIGENCE"⬇️ •••••••• 👉Check out the ChatGPT intensive 1-hour video course: geni.us/chatgptcourse •••••••• 🆕 New Button: "Use more intelligence" appeared in ChatGPT without an official announcement 🤔 Speculated Effect: Users think it enhances depth, accuracy, and reasoning in responses ❓ Unconfirmed Purpose: No official explanation from OpenAI on its function or impact 🧪 Possible Experiment: Could be an A/B test or a gradual feature rollout 🔄 User Feedback: Some notice improvements, while others see no difference ⏳ Awaiting Clarity: OpenAI has yet to provide details on its role and availability •••••••• Check out our 1 hour intensive course on ChatGPT for Finance & Business: geni.us/chatgptcourse AI for Finance • Data Studios www.datastudios.org

Cost of Goods Sold vs. Cost of Sales: What is the Difference?⬇️ 👉Check out our Complete Guide to Financial Analysis & Management: geni.us/finances •••••••• ✦ Cost of Goods Sold refers to the cost of producing a product. It includes direct expenses like raw materials, labor, and manufacturing. So, it’s more common for industrial businesses, but service companies use it too. ✦ Cost of Sales goes beyond production costs. It includes all expenses related to selling products or services. This could mean distribution, marketing, or sales team expenses. ✦ You can learn more about differences in similar financial terms by following our page or checking out our guides and courses. If you are curious or need help, visit www.datastudios.org AI for Finance • Data Studios