[PDF] How to Interpret Financial Management Statements:

[PDF] Above the Line vs Below the Line Deductions

Below the Line Deductions ? An “above the line” deduction is a deduction from income that occurs before the calculation of the taxpayer's adjusted gross

[PDF] Accounting for Non-Recovere - American Gas Association

19 mai 2014 · Above the Line, Below the Line: Accounting for “Below-the-line” expenses and revenues not included in the rate-setting process

[PDF] How to Interpret Financial Management Statements:

Cost of Goods Sold (COGS) Above the Line Top Line The Line Net Profit Bottom Line Below The Line Direct Labor Direct Materials Indirect Expenses

[PDF] Glossary of Utility Finance and Accounting Terms

above-the-line expenses If the item falls below the net operating income line of the income statement, it is labeled a below-the-line item

[PDF] DoD Financial Management Regulation Volume 15, Definitions

Above-the-line-Cost Cost identified as specific FMS line items for articles or services or detailed accounting requirements below the FMS

[PDF] Where is the Line? The Effect of Narrowed Scope of Discontinued

of interest to accounting regulators, firm managers, analysts, and investors when they interpret both above- and below-the-line items

[PDF] COMMENTS ON TRANSACTIONAL PROFIT METHODS - OECD

“above the line” expenses, traditional transaction methods should remain the conclusion, it is a sign that “below the line” expenses (in the form of

[PDF] How to Interpret Financial Management Statements:

1511_2How_to_Interpret_Financial_Management_Statements_____Using_KPIs_to_Drive_Profitable_Business_Stephen_King.pdf

ATHENA ALLIANCE2021WWW.ATHENAALLIANCE.COMAthena SalonHow to Interpret Financial Management Statements:Using KPIs to Drive Profitable Business Performance

Stephen King, CPA•Ernst & Young, CPA, CGMA•Amnesty International USA-CFO-Director of Development-Currently Founder & CEO of GrowthForceAbout Me•Currently Founder & CEO of GrowthForce

Agenda•Financial Vs. Management Reports•3 Basic Financial Statements•5 Decisions That Drive Profits

Financial Statements -Traditional ViewDesigned for compliance, not relianceTraditionalFinancial Statements

Management Accounting •Cost Accounting•Unit Economics•TrendsVIRTUAL SALON

The 3 Basic Financial Statements8ABCBalance Sheet:Snapshot of balances as of one specific day.Cash Flow Forecast: Sources and Uses of CashIncome Statement:Profit or Lossovera period of time.VIRTUAL SALON

Income StatementA

Why is an Income Statement Important?•It shows if the services a company offers are profitable. •It shows how much is left after taking out all the expenses associatedwith running the business.

Basic Income StatementLook at Net Income/Profit or (Loss) as $ and %ACompany TotalIncome / Revenue$2,000,000-Expense1,466,000= Net IncomeNet Income %$116,667

Basic Income StatementACompany TotalIncome$2,000,000-Expense•Accounting$46,000•Advertising$48,000•Bad Debts$10,000•Depreciation$15,000~~~~~~~~~~~~~~~~~•Payroll (Salary/Wages)$985,000•Payroll Taxes$115,000~~~~~~~~~~~~~~~~~-Total Expenses1,466,000= Net Income $$116,667Net Income %6.7%•The Expense accounts are often in alphabetical order.•Payroll is the biggest expense, yet usually lumped together.•We recommend allocating payroll based on the activities completed

'Above the Line' vs 'Below the Line'IncomeGross ProfitCost of Goods Sold (COGS)Above the LineTop LineThe LineNet ProfitBottom LineBelow The LineDirect LaborDirect MaterialsIndirect ExpensesIndirect LaborOverhead

Balance SheetB

Assets (What You Own)àCash àA/RàFurnitureàPCsLiabilities(What You Owe)Equity (Who Own What's Left?)àPayablesàCredit CardsàBank LoansBalance Sheet Basics

Balance Sheet MathAssets LiabilitiesEquityBAssets LiabilitiesEquityAn investor's view...A bank's view...

Balance Sheet = Ratios DSO(Days Sales Outstanding)Shows # of days to collect $1 of ARCurrent Ratio Current assets -Current LiabilitiesShow ability to pay bills.Debt to Equity = Debt / EquityShows how much leverage in the businessB

Cash FlowC

Cash Flow is about timing...•When money flows in and out•Understand the timing of your cash flow during good times and bad.C

Prepare a Cash Flow ForecastC

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3 Types of Financial Statements•Income Statement -increase profits•Balance Sheet -borrow or raise money•Cash Flow -lifeblood of the businessThe Bottom Line

What decisions do you make?What are the drivers of those decisions?What data can inform those decisions?How to Make Data Driven Decisions

Decisions That Drive Profits2. PricingAre you pricing your jobs right?3. Hire and Fire: People Clients, Products & ServicesWhich clients & products should you fire?5. Spend $ to Make $How do youmaximizeSales & Marketing?4. ProductivityHow can you Increase the Productivityof your people?The 5 Decisions1. TimeWhere do you focus your energy?

VIRTUAL SALON5 Most Important Drivers1. Gross Revenue $2. Gross Profit $3. Gross Profit %4. Net Income $5. Net Income %àDo you have a top lineproblem?àDo you have above the line problem?àDo you have a below the lineproblem?

Company Scorecard RowsNet Income($ & %)Gross Profit ($& %)Gross Revenue($)

Company Scorecard ColumnsActualGross RevenueGross Profit $ &%Net Income $ &%TTMGross RevenueGross Profit $ &%Net Income $ & %

TTM -The Best Way to Measure EVERYTHING•an XY chart where each dot on a chart represents the total for the previous 12 months•eliminates seasonality in a business and tells a true storyChange from month to month is theincrease or decrease of the month you added vs. the month that dropped off.

•How does revenue compare to plan?•What direction are we going?•Does turnover affect income?Gross Revenue

Gross Profit•How do staff changes impact profits?•What ROI did we get fromsystems & training?•Who are my best performers?

Net Income•How well do I manage the company?•Do I need to reduce overhead costs?•What does this do to my cash flow?

Summary•Financial Vs. Management Reports•3 Basic Financial Statements•5 Decisions That Drive Profits

Get The Resources!www.growthforce.com/athenaStephen Kingstephen@growthforce.com

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