3-Month Account Course

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3-Month Account Course

3MAC Training

FINANCE COACH

Finance Coach 3MAC Training Video

Purpose of this Webinar

How solid is your Financial Education? Improve it now with the… 3-Month Accounting Course (for non-accountants)

Welcome to the Webinar

“Managing your Balance Sheet.”

Welcome to the Webinar

1. Auditing (Part II) 2. Planning (Part I)

Balance Sheet A Pathway for Financial Management 1. 2. 3. 4. 5. 6. 7.

Collect Audit Review (ie ratios) Targets Analyse ACTION! Monitor

3MAC Week 7 Page 6

Balance Sheet

I’ve got not the slightest doubt that many business failures could have been prevented by having scrupulously clean up-to-date financial reports.

Balance Sheet Balance Sheet Audit 1. ASSETS 1. Current Assets 2. Non-current Assets 2. LIABILITIES 1. Current Liabilities 2. Non-current Liabilities 3. EQUITY 1. Owners’ Equity 2. Retained Profits 3. Etc

3MAC Week 7 Page 7-14

Balance Sheet Current Assets Section 1. 2. 3. 4.

Aging Bank Reconciliation Inventory (ie trading stock) Doubtful & Bad Debts

3MAC Week 7 Page 8-10

Balance Sheet Non-current Assets Section 1. Goodwill 2. Asset Register

3MAC Week 7 Page 11

Balance Sheet Current Liabilities Section 1. 2. 3. 4. 5. 3MAC Week 7 Page 11

Credit Cards Creditors (Accounts Payable) Matching Purchases & Stock Unpaid Entitlements Accrued Expenses

Balance Sheet Non-current Liabilities Section 1. Non-current Portion of Long Term Loans 2. Family Loans

3MAC Week 7 Page 14

Balance Sheet Owners’ Equity Section 1. Understand your structure 2. Explain each line on the Report 3. Trusts 1. Equity displayed as a Liability 2. Overdrawn Account shown as an Asset! 3MAC Week 7 Page 11

Continual Improvement Management Decisions

Results are Analysed

Financial Data is Collected

3MAC Week 7 Page 16

Deploys Resource

Process is Done

Background… Need for Planning: A group survey was done: 3%

1. 70% had no goals. 2. 27% had ‘verbal’ goals. 3. 3% had written goals.

27%

70%

The 3% had accumulated more personal wealth than the rest of the group combined!

SMART Goals S

= Specific

M

= Measurable

A

= Achievable

R

= Results Driven

T

= Time Bound Make your goals S.M.A.R.T. Goals!

Financial Operating Cycle Profit & Loss

Balance Sheet

Sales

Assets

Less COGS

Less:

Gross Profit

Liabilities

Less Expenses

Equals:

Net Profit

Owners’ Equity

3MAC Week 7 Page 22

Sustainable Growth Rate The Formula

(P x R) x (1 + L) A – (P x R) x (1 + L)

3MAC Week 7 Page 24-29

Sustainable Growth Rate P = NPAT; the net Profit margin, after taxes have been paid

Example

Sales Less COGS Equals GP Less Overheads Equals NP Less Tax Equals NPAT NPAT ÷ Sales Equals NPAT%

4,525,245 (2,715,147) 40% (1,163,634) 646,464 (193,939) 452,525

10%

10%

R = Percentage of profits Retained in the business Profits Drawings Equals Retained P. RP ÷ Profits

452,525 (226,263) 226,263

50%

50%

L = Leverage; the Debt to Equity Ratio Debt Equity Debt ÷ Equity

1,565,423 1,956,877 80%

80%

A = Assets to Sales Ratio

3MAC Week 7 Page 24-29

Assets Sales Assets ÷ Sales

3,522,300 4,525,245 78%

Sustainable Growth: (P x R) x (1 + L) A - (P x R) x (1 + L)

78%

13.1% 1.5%

Strategic Financial Plan The 12 Steps

3MAC Week 7 - Appendix

Strategic Financial Plan ABC CONFECTIONERY CO - PROJECTED PROFIT & LOSS Review the below projected profit and loss statement and adjust the suggested expenses as appropriate.

Scenario

S1

S2

S3

Projected Sales Growth

0%

30%

60%

Sales - General

Total Sales

$

Cost of Goods Sold: Opening Stock and WIP Purchases and Inwards Freight Closing Stock and WIP

Direct Wages Outwards Freight Factory Depreciation Sundry Direct Costs Another Cost

Gross Profit

$

4,217,000 4,217,000

$

Sales & Marketing Expenses Wages & Salaries - Sales & Marketing

$

Variance

F/A

6,543,124

5,629,624 5,629,624



1,880,314



746,664 (16) 374,453 (91) 1,121,009



2,628,300



6,543,124

626,965 2,152,123 (868,465) 1,910,623

626,965 2,614,523 (1,102,453) 2,139,035

732,735 453,283 420 1,186,438

952,556 97 453,283 546 1,406,482

1,172,376 223 453,283 672 1,626,554

905,423

1,836,080

$

Business Name:

2,522,194 46.0%

2,522,194

File Start Date: 105,023

$

3,208,823 47.6%

$

450,000

1,355,423 $

3,048,666

$

46.6%

ABC Confectionery Co 3,208,823

S2

Actuals 2 months

626,965 1,630,961 (705,602) 1,552,324

1,836,080 Overhead Expenses:

$

6,746,000 6,746,000

View P&L

626,965 1,226,184 (658,667) 1,194,482

43.5%

Other Income

5,481,000 5,481,000

Reset

3,048,666



   

0.6% 

2,628,300



March 2012 105,023

105,023

113,509

Australian Dollars 96,005 

Any Questions?

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