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๐๐ผ๐ ๐ง๐ผ ๐๐๐ฎ๐น๐๐ฎ๐๐ฒ ๐๐ป๐ฐ๐ผ๐บ๐ฒ ๐ฆ๐๐ฎ๐๐ฒ๐บ๐ฒ๐ป๐๐ฅ๐๐ฉ๐๐ก๐จ๐๐ฆEnsure GAAP compliance. Look at the growth rate. An increase is generally positive, indicating growing business.๐๐ข๐ฆ๐ง ๐ข๐ ๐๐ข๐ข๐๐ฆ ๐ฆ๐ข๐๐Compare COGS as % of revenue. If it's increasing, it might mean the production is rising faster than its pricing power.Increasing the gross marking margin means pricing power and cost control.๐ฆ๐๐๐๐ฅ๐๐๐ฆIf the salary expense is rising faster than revenues, it might suggest the company is becoming less efficient in itscosts๐ฆ๐๐๐๐๐ก๐ ๐๐ก๐ ๐ ๐๐ฅ๐๐๐ง๐๐ก๐Analyze Absolute amount, % in revenues, growth and effectiveness. Cost increase should result in revenue increase.๐&๐Monitor this as a % of revenues. A rising % might indicate in the company's operations๐๐๐๐ง๐๐Investors like EBITDA because it focuses on operational performance. Compare across peers for a better understanding๐๐ฒ๐ฝ๐ฟ๐ฒ๐ฐ๐ถ๐ฎ๐๐ถ๐ผ๐ป ๐ฎ๐ป๐ฑ ๐ฎ๐บ๐ผ๐ฟ๐๐ถ๐๐ฎ๐๐ถ๐ผ๐ปD&A to CAPEX ratio over time and compare with peers. Approach useful lifes of assets.๐๐ก๐ง๐๐ฅ๐๐ฆ๐งCalculatecoverage ratio (EBITDA/Interest Expense), analyze trends and compare with peers.๐ฃ๐ฅ๐ข๐๐๐ง ๐๐๐๐ข๐ฅ๐ ๐ง๐๐ซ๐๐ง๐๐ข๐กEvaluate operating leverage and compare the growth rate of revenue to the growth rate of PBT and trends in profit rates.๐ง๐๐ซUnderstand the effective tax rate). If this is fluctuating significantly, delve into why. Any benefit from incentives๐ก๐๐ง ๐ฃ๐ฅ๐ข๐๐๐งLook at the net profit margin (Net Income/Revenues) and compare it over time and against peers.___________________________๐ Financial analysis is only one part of the ๐๐ผ๐ฟ๐ฝ๐ผ๐ฟ๐ฎ๐๐ฒ ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ฒ ๐ ๐ผ๐ฑ๐ฒ๐น๐ถ๐ป๐ด Course. Check all 5 modules, 35 lessons, and 50 modeling spreadsheets:https://lnkd.in/ddH693WpStart growing your career and income._________________________#incomestatement
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Aleksandar Stojanoviฤ, MSc.
Scaling Tech Startups & SMEโs with ARR $1M-$50M | $300K+ in Client Savings | Keynote Speaker | 1:1 Coaching | Fractional CFO
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Nevena, great overview! Companies and investors are progressively leaning towards metrics that offer a more nuanced view of financial health and potential, such as customer acquisition cost (CAC), lifetime value (LTV), monthly recurring revenue (MRR), and annual recurring revenue (ARR).
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Sasmita Sahu
Cost Accountant | Forensic Accounting | Risk management professional
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Great breakdown! Understanding how to evaluate an income statement is crucial for financial analysis and decision-making. Thanks for sharing these insights.
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Muhammad Sohail
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William Dadzie
Senior Accountant at Movis Ghana Limited
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Glad to receive a pdf copy
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Sazly Rahman
Student at North South University
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very helpful , nice
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Nevena Miskovic
I Help Finance Juniors to Upgrade Skills and Career in FP&A and Controlling.
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What are the types of Scenario analysis?Here are my favorite 7 types.1๏ธโฃ ๐๐ฒ๐๐ / ๐ช๐ผ๐ฟ๐๐ ๐๐ฎ๐๐ฒ ๐ฆ๐ฐ๐ฒ๐ป๐ฎ๐ฟ๐ถ๐ผDescription: The best case scenario assumes the most favorable conditions for the business. Involves optimistic assumptions like sales growth, market conditions, etc. The worst case considers the worst possible conditions that could reasonably occur. Purpose: Used for risk assessment and to ensure that the business can survive under adverse conditions.2๏ธโฃ ๐ฆ๐ฒ๐ป๐๐ถ๐๐ถ๐๐ถ๐๐ ๐๐ป๐ฎ๐น๐๐๐ถ๐Description: This involves changing one key factor at a time (like sales volume, price, cost, etc.) to see how sensitive the model is to changes in that factor.Purpose: Helps in understanding which variables have the most significant impact on the financial outcomes.3๏ธโฃ ๐๐ฟ๐ฒ๐ฎ๐ธ-๐๐๐ฒ๐ป ๐๐ป๐ฎ๐น๐๐๐ถ๐Description: This scenario determines the point at which total costs and total revenue are equal, i.e., there is no net loss or gain.Purpose: Used to understand the minimum performance level required to avoid losses.4๏ธโฃ ๐ฆ๐๐ฟ๐ฒ๐๐ ๐ง๐ฒ๐๐๐ถ๐ป๐ดDescription: Involves applying extreme conditions or shocks to a single factor or a combination of factors in the model (e.g., sudden market crash, rapid interest rate changes).Purpose: To test the resilience of the financial model under extreme but plausible conditions.5๏ธโฃ ๐ ๐ผ๐ป๐๐ฒ ๐๐ฎ๐ฟ๐น๐ผ ๐ฆ๐ถ๐บ๐๐น๐ฎ๐๐ถ๐ผ๐ปDescription: A more complex form of scenario analysis that uses random sampling and statistical modeling to estimate possible outcomes.Purpose: To account for risk and uncertainty in quantitative analysis and decision-making.6๏ธโฃ ๐๐ป๐ฑ๐๐๐๐ฟ๐-๐ฆ๐ฝ๐ฒ๐ฐ๐ถ๐ณ๐ถ๐ฐ ๐ฆ๐ฐ๐ฒ๐ป๐ฎ๐ฟ๐ถ๐ผ๐Description: Tailored to specific industries, these scenarios take into account factors unique to a particular sector (like regulatory changes in pharmaceuticals, technology shifts in IT, etc.).Purpose: To provide more detailed and relevant insights for businesses operating in specific sectors.7๏ธโฃ ๐ฅ๐ฒ๐ด๐๐น๐ฎ๐๐ผ๐ฟ๐ ๐๐บ๐ฝ๐ฎ๐ฐ๐ ๐๐ป๐ฎ๐น๐๐๐ถ๐Description: Examines the impact of potential changes in laws or regulations on the financial model.Purpose: To prepare for changes in the regulatory environment.------------๐ In finance, we can't level up our skills and careers without knowing how to build sustainable models. Grab the Modeling Package here:https://lnkd.in/dp6FnzQcโ ๐ฒ๐ต+ of Video Materials (35 Lessons in 5 Modules)โ ๐ฑ๐ฌ+ Finance Models in Excelโ ๐ฏ๐ฏ๐ฌ+ Pages of Instructions in PDFโ ๐ฏ๐ฌ+ Bonus Materialsโ ๐ญ๐ฌ+ Languages subtitle#finance
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Nevena Miskovic
I Help Finance Juniors to Upgrade Skills and Career in FP&A and Controlling.
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Full Key Performance Indicators list.๐ช๐ฎ๐ป๐ ๐๐ต๐ถ๐ ๐ฝ๐ผ๐๐๐ฒ๐ฟ ๐ถ๐ป ๐ต๐ถ๐ด๐ต ๐ฟ๐ฒ๐๐ผ๐น๐๐๐ถ๐ผ๐ป? ๐๐๐๐ ๐น๐ฒ๐ฎ๐๐ฒ a ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐ ๐๐ฃ๐ ๐ผ๐ฟ ๐๐ถ๐บ๐ฝ๐น๐ ๐๐ ๐บ๐ฒ.๐ฃ๐ฅ๐ข๐๐๐ง๐๐๐๐๐๐ง๐ฌ ๐๐ฃ๐๐โEbitda marginโGross profit marginโNet profit marginโReturn on equityโReturn on capital employedโReturn on assetsโRevenue per employeeโEbitda per employeeโNet profit per employee๐๐๐๐๐๐๐๐ก๐๐ฌ ๐๐ฃ๐๐โDays sales outstandingโDays inventory outstandingโDays payable outstandingโCcc daysโAssets turnoverโFixed assets turnoverโEbitda to interest coverageโTotal cost per employeeโOverhead costs per employee๐๐๐ค๐จ๐๐๐๐ง๐ฌ ๐๐ฃ๐๐โNet working capitalโCurrent assets โ current liabilitiesโCurrent ratioโQuick ratioโCash ratioโWorking capital turnover๐๐๐ก๐๐ก๐๐๐๐ ๐ฆ๐ง๐ฅ๐จ๐๐ง๐จ๐ฅ๐ ๐๐ฃ๐๐โEquity ratioโDebt ratioโInterest expense in loansโTotal cogs in revenueโVariable cogs in revenueโFixed cogs in revenue๐๐๐ฆ๐ ๐๐ฃ๐๐โOperating cash flowโFree cash flowโCash conversion cycleโFree cash flow rateโFree cash flow realizationโCash ratio๐๐ก๐ฉ๐๐ฆ๐ง๐ข๐ฅ / ๐ฉ๐๐๐จ๐๐ง๐๐ข๐ก๐๐ฃ๐๐โPrice-to-Earnings (P/E)โPrice-to-Sales (P/S) RatioโPrice-to-Book (P/B) RatioโEnterprise Value-to-EBITDA (EV/EBITDA)โPrice-to-Cash Flow (P/CF) RatioโDividend Yield______________________๐ These KPIs are the backbone of the ๐๐ผ๐ฟ๐ฝ๐ผ๐ฟ๐ฎ๐๐ฒ ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ฒ ๐๐ผ๐๐ฟ๐๐ฒ. If you want to transform your career in finance, follow these 35 lessons:๐https://lnkd.in/dyMzqA73Happy practicing!hashtag#KPI hashtag#KPIs
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Nevena Miskovic
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Nevena Miskovic
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The essential KPIs for accounting, tax, and audit firms.KPIโข Revenue per accountantโข Time utilizationโข Gross hourly rateโข Actual billing rateโข Gross profitโข Gross profit rateโข Net profit โข Net profit rateโข Profit per accountantโข Revenue churn rate+ Formulas + Meaning.________________________________Join Corporate Finance Learning Platform:๐https://lnkd.in/dyfrW-GyWhat is in?๐ 6 Hours of video course sessions๐ 50+ finance modeling sheets, editable in Excel๐ 330 pages of PDF finance modeling instructions๐ 30+ Pieces of actionable content: visuals, handbooks.#accounting #finance
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Nevena Miskovic
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These three concepts provide a full view of financial performance๐ฃ๐ฟ๐ผ๐ณ๐ถ๐๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ focuses on generating earnings, ๐น๐ถ๐พ๐๐ถ๐ฑ๐ถ๐๐ ensures a company's ability to meet short-term obligations, and ๐ฒ๐ณ๐ณ๐ถ๐ฐ๐ถ๐ฒ๐ป๐ฐ๐ evaluates how well a company uses its resources to generate outputs.Learn how to calculate and analyze key ratio numbers of those 3 concepts.Comment or DM for high-resolution PDF.___________________________๐ If you are ready for the first steps to build your own financial model start with these 35 lessons: https://lnkd.in/dY-BpUEtGood luck!___________________________
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Nevena Miskovic
I Help Finance Juniors to Upgrade Skills and Career in FP&A and Controlling.
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Here is a quick analysis of the balance sheet:๐๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐ฎ๐๐๐ฒ๐๐โ calculate the working capital (current assets - current liabilities) to assess the company's liquidity.๐๐ฎ๐๐ตโ calculate cash to short-term liabilities to review any potential liquidity issues in the very short term.๐๐ฐ๐ฐ๐ผ๐๐ป๐ ๐ฟ๐ฒ๐ฐ๐ฒ๐ถ๐๐ฎ๐ฏ๐น๐ฒ๐โcalculate DSO to see how quickly the company collects cash๐๐ป๐๐ฒ๐ป๐๐ผ๐ฟ๐ถ๐ฒ๐โ calculate DIO to see how the company is efficient in converting inventories into cash๐๐ถ๐ ๐ฒ๐ฑ ๐ฎ๐๐๐ฒ๐๐โ check the efficiency with fixed asset turnover evaluationโ evaluate fair value, especially for intangibles.๐๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐น๐ถ๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ถ๐ฒ๐โ calculate the current ratio and quick ratio to assess liquidity๐๐ฐ๐ฐ๐ผ๐๐ป๐ ๐ฝ๐ฎ๐๐ฎ๐ฏ๐น๐ฒ๐โ calculate DPO to track how quickly company pays a bill and tends to prolong terms.๐ฆ๐ต๐ผ๐ฟ๐ ๐๐ฒ๐ฟ๐บ ๐ฑ๐ฒ๐ฏ๐โ top priority in payment. make sure in company's ability to meet its immediate financial obligations ๐ก๐ผ๐ป-๐ฐ๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐ฑ๐ฒ๐ฏ๐โ evaluate the debt-to-asset ratio to determine solvency๐๐พ๐๐ถ๐๐โ calculate the equity ratio (equity / total assets) to understand stabilityโ ROE (net income/equity) to understand the profitabilityโถ๏ธ ๐ ๐ฎ๐ธ๐ฒ ๐๐๐ฟ๐ฒ ๐๐ผ๐ ๐ฑ๐ผ ๐๐ต๐ถ๐ ๐ถ๐ป ๐ฟ๐ฎ๐๐ถ๐ผ ๐ฎ๐ป๐ฎ๐น๐๐๐ถ๐1. understand the meaning of the ratio2. result interpretation3. compare with last period, budget and industry peers4. action plan___________________________๐ Bad planning โ bad results. Good planning โ good results. What is your choice? Level up your planning skills: https://lnkd.in/dKCPenqxHappy practicing!___________________________#finance #accounting #balancesheet
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