Know Your Number$

Sum Up Your Expenses for Maximum Control

Our second section in our financial literacy series is focused on expenses. We will look into different types of costs (seen below) and how to track and analyze them.

In this video we will look at: 

• Fixed Operating Costs– are they being managed to the extent possible?
• Variable Costs- COGS and everything related to them, as well as any other expenses that change with levels of sales

Evaluate Your P&L to Understand Your Situation

Now that we’ve looked at revenue and expenses in our first two sections, we will look at the Profit and Loss Statement and learn how it provides answers to the question “How am I doing?”

 In this video we will look at: 

• What the pieces and structure of the Profit and Loss Statement mean.
• Regular review and evaluation are a must. (You do not need to be a CPA to review effectively)
• The review consists of more than just a “top line / bottom line” look.

(Profit and Loss examples included in the attached spreadsheet)

Figure out the Pluses & Minuses of Your Balance Sheet

The Balance sheet is a snapshot of the financial condition of the business at any point in time. Are your assets covering your liabilities and equity? We will go through how the balance sheet is organized and how this underutilized statement can give crucial warning signs.

In this video we will look at: 

• What is defined as short-term vs long-term?
• Line-by-line analysis of what this statement comprises.
• How this statement is used comparatively and can identify trends that are starting to occur early

(Balance Sheet examples included in the attached spreadsheet)

Calculate Your Financial Metrics for Accurate Planning

The Key Performance indicators listed below are vital signs of a business’s health. They are quick measurements of your performance. 

In this video we will look at: 

• Total Income
• Gross Profit Margins
• Fixed Operating Costs
  • Labor Burden
• Balance Sheet Metrics
• Net Profits
• Industry-Specific Metrics

(Key Performance Indicator examples included in the attached spreadsheet)

Cash is King…the Equation for Successful Cash Flow Management

This section on cash flow management will show why it may look like you are making money but aren’t seeing your profits increase. This section runs a little longer to include crucial insights and shares an example of how to track and manage cash flow.

In this video we will look at: 

• How is cash flow Calculated?
  • Cash flow is not the same thing as profits.  Can be much different.
• How do you manage cash flow? 
• What are the possible problems with cash flow?
• Walkthrough example of cash flow problem projections
  • Tools- 13-week rolling cash flow and/or monthly cash flow projections, lines of credit, use of credit terms

(Cash Flow Example used in the video is included in the attached spreadsheet)

Best Practices and Pro-Tips

The final section is an extra catch-all of professional tips on how to use the knowledge you just learned and how to create processes to maintain control and manage the best financial future for your company.

In this video we will look at: 

• How to evaluate your bookkeeper
• Best practices suggestions for documentation of internal controls.
• Return on Investment (ROI) tips