Milica Đurić Kostić on LinkedIn: #cashflowmanagement #financialforesight #financeskills | 16 comments (2024)

𝗧𝘆𝗽𝗶𝗰𝗮𝗹 𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 🆚 𝗥𝗼𝗹𝗹𝗶𝗻𝗴 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝘀 - two essential financial planning tools for businesses. Let's break down their characteristics:𝗗𝗲𝗳𝗶𝗻𝗶𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗣𝘂𝗿𝗽𝗼𝘀𝗲𝘉𝘶𝘥𝘨𝘦𝘵𝘪𝘯𝘨Creating a plan for a company's future income and expenses over a specific period, usually a year.Purpose: Primarily used for setting targets and establishing spending limits.𝘙𝘰𝘭𝘭𝘪𝘯𝘨 𝘍𝘰𝘳𝘦𝘤𝘢𝘴𝘵Involves continuous updates to financial forecasts, typically every quarter, reflecting changes in the business environment and company performance.Purpose: Offers flexibility and often extends beyond the fiscal year.𝗧𝗶𝗺𝗲 𝗙𝗿𝗮𝗺𝗲𝘉𝘶𝘥𝘨𝘦𝘵𝘪𝘯𝘨Typically fixed for a year.𝘙𝘰𝘭𝘭𝘪𝘯𝘨 𝘍𝘰𝘳𝘦𝘤𝘢𝘴𝘵Usually extends three to six quarters ahead, regularly updated (often quarterly).𝗙𝗹𝗲𝘅𝗶𝗯𝗶𝗹𝗶𝘁𝘆𝘉𝘶𝘥𝘨𝘦𝘵𝘪𝘯𝘨Generally static and less flexible once set.𝘙𝘰𝘭𝘭𝘪𝘯𝘨 𝘍𝘰𝘳𝘦𝘤𝘢𝘴𝘵Highly adaptable, allowing adjustments based on current business realities.𝗙𝗼𝗰𝘂𝘀𝘉𝘶𝘥𝘨𝘦𝘵𝘪𝘯𝘨Primarily on cost control and adhering to financial targets.𝘙𝘰𝘭𝘭𝘪𝘯𝘨 𝘍𝘰𝘳𝘦𝘤𝘢𝘴𝘵Emphasizes predicting future performance and adapting to changes.For a detailed comparison, check the graph below. Excited to explore these financial planning tools and their impact on strategic decision-making! __________________________________📌 If you are readyto transform your career with finance modeling skills start with these 35 lessons and 50+ modeling spreadsheets: 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗶𝗻?💠 35 Lessons 💠 6 Hours of video course 💠 10+ Languages subtitle💠 50+ Editable Excel modeling sheets💠 330 pages of PDF finance modeling instructions 💠 30+ Pieces of actionable visuals and handbooks👉 https://lnkd.in/dd79y_37#FinancialPlanning #Budgeting #RollingForecasts #BusinessInsights

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Excited to share insights into 9 key financial models1️⃣𝗧𝗵𝗿𝗲𝗲-𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗠𝗼𝗱𝗲𝗹Unifies income statement, balance sheet, and cash flow, offering a holistic view for forecasting based on historical performance.2️⃣𝗗𝗶𝘀𝗰𝗼𝘂𝗻𝘁𝗲𝗱 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 (𝗗𝗖𝗙) 𝗠𝗼𝗱𝗲𝗹Calculates intrinsic value by discounting future cash flows, aiding in investment decision-making.3️⃣𝗖𝗼𝗺𝗽𝗮𝗿𝗮𝗯𝗹𝗲 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 (𝗖𝗖𝗔) 𝗠𝗼𝗱𝗲𝗹Evaluates a company's valuation relative to industry peers, providing market insights.4️⃣𝗣𝗿𝗲𝗰𝗲𝗱𝗲𝗻𝘁 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 (𝗣𝗧𝗔) 𝗠𝗼𝗱𝗲𝗹Values a company based on historical M&A transactions, offering a benchmark for potential acquisitions.5️⃣𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲𝗱 𝗕𝘂𝘆𝗼𝘂𝘁 (𝗟𝗕𝗢) 𝗠𝗼𝗱𝗲𝗹Assesses acquisitions using borrowed funds, crucial for private equity firms.6️⃣ 𝗠𝗲𝗿𝗴𝗲𝗿 𝗠𝗼𝗱𝗲𝗹 (𝗠&𝗔)Analyzes the financial impact of mergers and acquisitions, guiding strategic decisions.7️⃣ 𝗜𝗻𝗶𝘁𝗶𝗮𝗹 𝗣𝘂𝗯𝗹𝗶𝗰 𝗢𝗳𝗳𝗲𝗿𝗶𝗻𝗴 (𝗜𝗣𝗢) 𝗠𝗼𝗱𝗲𝗹Prepares financial projections and valuation for companies planning to go public, facilitating a successful IPO.8️⃣ 𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 𝗠𝗼𝗱𝗲𝗹Used for internal planning and budgeting within a company. It helps in allocating resources for the upcoming year(s). 9️⃣ 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝗶𝗻𝗴 𝗠𝗼𝗱𝗲𝗹Similar to budgeting models but usually with a longer horizon, focusing on predicting future financial performance based on historical data and growth assumptions.Each model serves a unique purpose, enabling robust financial analysis and strategic planning. Leveraging these tools empowers businesses to make informed decisions, drive growth, and enhance financial performance. ___________________________📌Build your model → Ensure sustainable growth → Improve your income. Start with these:👉https://lnkd.in/ertHh9jm#Finance #Strategy #FinancialModels #BusinessInsights #StrategicPlanning

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Valuation by Multiples Model𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝗧𝗵𝗲 𝗖𝗼𝗻𝗰𝗲𝗽𝘁▶️ Employed in business valuation to compare a company's financial performance with that of similar entities in the market.▶️ Computed by dividing the company's market value by a financial metric such as earnings, sales, book value, or cash flow.▶️ Significantly valuable in business valuation due to its provision of a swift and straightforward method for evaluating a company's relative value against its industry peers.▶️ Applied in two key valuation methods: Comparable Companies Method and Precedent Transaction Method.𝗖𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗠𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝗠𝗲𝘁𝗿𝗶𝗰𝘀1. Price-to-Earnings (P/E)2. Price-to-Sales (P/S) Ratio3. Price-to-Book (P/B) Ratio4. Enterprise Value-to-EBITDA (EV/EBITDA)5. Price-to-Cash Flow (P/CF) Ratio6. Dividend Yield𝗔𝘀𝘀𝗲𝘀𝘀𝗶𝗻𝗴 𝗧𝗵𝗲 𝗖𝗼𝗺𝗽𝗮𝗿𝗮𝗯𝗹𝗲 𝗙𝗮𝗰𝘁𝗼𝗿𝘀• Industry and Sector• Size• Growth Rates• Profitability• Market Position• Geography𝗨𝘁𝗶𝗹𝗶𝘇𝗶𝗻𝗴 𝗗𝗮𝘁𝗮 𝗮𝗻𝗱 𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁𝘀• Utilize a Database of Precedent Transactions: MergerMarket, Dealogic, or S&P Capital IQ.• Rely on Public Data: Access publicly available information from SEC filings, press releases, and news articles.𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁𝘀 𝗳𝗼𝗿 𝗘𝗻𝗵𝗮𝗻𝗰𝗲𝗱 𝗖𝗼𝗺𝗽𝗮𝗿𝗮𝗯𝗶𝗹𝗶𝘁𝘆• Timeframe Adjustment• Synergy Adjustment• Size Adjustment• Risk Profile Adjustment• Non-recurring Items_________________________📌This model is not the only one in our modeling collection. Check others and boost your skills in corporate finance:👉https://lnkd.in/dzewAq6R#FinancialAnalysis #CorporateFinance #BusinessValuation

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Explore these essential 𝗞𝗲𝘆 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗜𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿𝘀 lists with me: 𝗣𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗞𝗣𝗜𝘀→ EBITDA Margin→ Gross Profit Margin→ Net Profit Margin→ Return on Equity→ Return on Capital Employed→ Return on Assets→ Revenue per Employee→ EBITDA per Employee→ Net Profit per Employee𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆 𝗞𝗣𝗜𝘀→ Days Sales Outstanding→ Days Inventory Outstanding→ Days Payable Outstanding→ CCC Days (Cash Conversion Cycle)→ Assets Turnover→ Fixed Assets Turnover→ EBITDA to Interest Coverage→ Total Cost per Employee→ Overhead Costs per Employee𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗞𝗣𝗜𝘀→ Net Working Capital→ Current Assets – Current Liabilities→ Current Ratio→ Quick Ratio→ Cash Ratio→ Working Capital Turnover𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝗞𝗣𝗜𝘀→ Equity Ratio→ Debt Ratio→ Interest Expense in Loans→ Total COGS in Revenue→ Variable COGS in Revenue→ Fixed COGS in Revenue𝗖𝗮𝘀𝗵 𝗞𝗣𝗜𝘀→ Operating Cash Flow→ Free Cash Flow→ Cash Conversion Cycle→ Free Cash Flow Rate→ Free Cash Flow Realization→ Cash Ratio𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿/𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗞𝗣𝗜𝘀→ Price-to-Earnings (P/E) Ratio→ Price-to-Sales (P/S) Ratio→ Price-to-Book (P/B) Ratio→ Enterprise Value-to-EBITDA (EV/EBITDA) Ratio→ Price-to-Cash Flow (P/CF) Ratio→ Dividend Yield𝗪𝗮𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁𝗲𝗿 𝗶𝗻 𝗵𝗶𝗴𝗵 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻? 𝗝𝘂𝘀𝘁 𝗹𝗲𝗮𝘃𝗲 a 𝗰𝗼𝗺𝗺𝗲𝗻𝘁 𝗞𝗣𝗜 𝗼𝗿 𝘀𝗶𝗺𝗽𝗹𝘆 𝗗𝗠 𝗺𝗲.______________________________________________📌 These KPIs serve as the backbone of the 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗠𝗼𝗱𝗲𝗹𝗶𝗻𝗴 𝗖𝗼𝘂𝗿𝘀𝗲:👉https://lnkd.in/dyJTBJgt🌐Join our network and elevate your finance career:https://lnkd.in/dbWnBk-i#Handbook #KPIs #PerformanceMeasurement 📊🚀

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I have a 𝗣𝗼𝗹𝗹 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻 for you and would love to hear your thoughts. 📊 𝗖𝗮𝘀𝘁 𝘆𝗼𝘂𝗿 𝘃𝗼𝘁𝗲 𝗮𝗻𝗱 𝘀𝗵𝗮𝗿𝗲 𝘆𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀! Every perspective matters in shaping effective learning experiences. Feel free to drop comments with your thoughts on what works best for you or any specific preferences! 💭#FinanceEducation #ContinuousLearning #FinanceSkills #LinkedInPoll

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𝗛𝗼𝘄 𝘁𝗼 𝗲𝗻𝘀𝘂𝗿𝗲 𝗮𝗰𝗰𝘂𝗿𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗥𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴? 📈In the world of finance, accurate reporting is the foundation of informed decision-making.Let's dive into 16 key points to ensure the integrity of your financial reporting:1. 📚 Establish clear and consistent accounting policies to provide a reliable framework for financial reporting.2. 📆 Ensure transactions are recorded promptly to prevent oversight and maintain up-to-date financial records.3. 🔍 Regularly reconcile accounts to identify and rectify any discrepancies, ensuring accuracy across the board.4. 💡 Implement strong internal controls to safeguard against errors, fraud, and misstatements.5. 🛑 Divide financial responsibilities among team members to prevent any single point of failure or potential manipulation.6. 📈 Base financial reports on realistic forecasts, aligning projections with market conditions and company performance.7. 🔄 Adhere to Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) for consistency and compliance.8. 🛡️ Keep detailed audit trails to trace financial transactions back to their source, enhancing transparency and accountability.9. 🌐 Understand and address the implications of reporting in multiple jurisdictions, considering diverse accounting standards.10. 👥 Invest in ongoing training for finance teams to keep them updated on accounting standards and reporting requirements.11. 🤝 Foster open communication with stakeholders, keeping them informed about financial performance and changes in reporting.12. 🔗 Utilize integrated financial systems to streamline data flow, reducing the risk of errors associated with manual data entry.13. 🔐 Implement robust data security measures to protect financial information from unauthorized access or cyber threats.14. 🚧 Develop contingency plans to ensure financial reporting can continue smoothly during unexpected disruptions or disasters.15. 🔄 Periodically review and update financial reporting processes to adapt to evolving business landscapes and regulatory changes.16. 🤖 Leverage automation and advanced financial tools to enhance accuracy and efficiency in reporting processes.Accurate financial reporting isn't just a goal, it's a commitment to transparency, accountability, and sound decision-making. What additional tips would you add to this list? 💬🔒 #FinancialReporting #AccountingBestPractices #FinanceExcellence

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𝗖𝗮𝘀𝗵 𝗖𝗼𝗻𝘃𝗲𝗿𝘀𝗶𝗼𝗻 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 📈💡Scenario analysis isn't just a tool; it's essential for financial foresight.By altering 𝗗𝗣𝗢, 𝗗𝗦𝗢, & 𝗗𝗜𝗢, we see varying cash flow impacts—highlighting its significance.The true power? Turning these insights into actions and understanding our cash cycle better.Prioritize liquidity. Analyze, adapt, and thrive.𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗶𝗻 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗶𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗯𝗲𝗰𝗮𝘂𝘀𝗲:→ Identifies potential pitfalls or downturns.→ Enables informed and proactive decisions.→ Guides efficient use of capital and resources.→ Provides transparency to investors and creditors.→ Allows for quick adjustments in business strategies.→ Helps in preparing for best and worst-case scenarios.→ Prepares the company for unforeseen market changes.→ Assists in setting benchmarks and evaluating outcomes._________________________________📌This analysis is part of the Corporate Finance Modeling Course. 👉 https://lnkd.in/d55Fu6Mq#Cash #ScenarioAnalysis #FinancialInsights

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𝗪𝗔𝗖𝗖 𝗕𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁𝘀 🧮Weighted Average Cost of Capital serves as a compass in the financial landscape, guiding companies toward optimal capital structures. It is a pivotal metric in determining the required rate of return. It encapsulates the returns expected by both bondholders and shareholders, providing the company with the capital it needs.🔍 𝗘𝘅𝗽𝗹𝗼𝗿𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁𝘀 𝗮𝗻𝗱 𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁 𝗙𝗮𝗰𝘁𝗼𝗿𝘀+Risk-Free Rate+Equity Premium RatexAdjusted for Leveraged Industry Beta+Size Risk Premium+Country Risk Premium+Specific Risk Premium💹 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗘𝗾𝘂𝗶𝘁𝘆+Cost of Debt Before Tax-Tax Effects+Cost of Debt After Tax🔄 𝗖𝗮𝗹𝗰𝘂𝗹𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗪𝗲𝗶𝗴𝗵𝘁𝗲𝗱 𝗔𝘃𝗲𝗿𝗮𝗴𝗲Understanding how each component contributes to the weighted average is crucial for an accurate assessment of WACC.______________________________________📌 WAAC is included in the Business Valuations section of the 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀.👉 https://lnkd.in/dQudUZKM✔ 𝟱𝗵+ of Video Materials (35 Lessons in 5 Modules)✔ 𝟱𝟬+ Finance Modeling sheets in Excel✔ 𝟯𝟯𝟬+ Pages of Instructions in PDF✔ 𝟯𝟬+ Bonus Materials✔ 𝟭𝟬+ Languages subtitle#finance #accounting #WACC #capitalcost #investing #analysis

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