As a financial leader, you look at financial statements every single day. But how do you analyze those statements? Sometimes financial statements can appear to be just a list of numbers that are simply there for record keeping. But the true purpose of keeping and updating financial statements is to have information to make better
According to Webster’s Dictionary, the breakeven point is defined as “the point at which cost and income are equal and there is neither profit nor loss“. The purpose of breakeven analysis is to determine the point at which revenue received equals the costs associated with receiving the revenue. Simply put, how much revenue we need
Return on Investment Return on Investment is a useful tool to understand, analyze, and compare different investment opportunities. Return on Investment or ROI measures the efficiency of a specific investment by revealing how net earnings recover the cost of the original investment. Have you ever wondered if the result of your investment was really worth
Over time weeds grow in any garden. In the same way, unprofitable customers work their way into your company. To avoid the high costs of low profit customers, you should perform an annual analysis of customer profitability. Therefore, weed your garden of customers who are sapping your profits and cash flow. Although there are many
Historically, CFOs have relied upon traditional financial statements to guide their decision-making. Today, the prevalence of more sophisticated accounting systems and the demand for more information more quickly has given rise to the need for different kinds of reporting. Here’s a list of 5 tools that can help give you manage cash, identify areas for improvement, and
See Also: How Do You Know When It is Time to Buy New Software How to Choose New Software Microsoft Dynamics Great Plains Functionalities How to Choose a Software Dealer How to Obtain a Microsoft Dynamics Licensing Agreement Microsoft Dynamics Microsoft Dynamics is the brand name of a group of business management solutions from Microsoft.
See Also: Financial Distress Costs Insolvency Bankruptcy Code What is Inflation? Recession Definition Altman Z Score Model Definition The Altman Z Score model, defined as a financial model to predict the likelihood of bankruptcy in a company, was created by Edward I. Altman. Altman was a professor at the Leonard N. Stern School of Business
See Also: Direct Labor Variance Formulas Direct Material Variance Formulas Asset Market Value versus Asset Book Value Accounting Income vs Economic Income ProForma Financial Statements Variance Analysis Variance analysis measures the differences between expected results and actual results of a production process or other business activity. Measuring and examining variances can help management contain and
See Also: Valuation Methods Value Drivers: Building Reliable Systems to Sustain Growth Porters Five Forces of Competition Responsibility Center Cost Driver Value Chain Definition Value chain refers to the functional activities of a business that add value to its customers. The concept was created around 1985 by Michael Porter, Harvard Business School professor. According to
See Also: Bottom Up Approach How to Prepare an Investor Package Common Stock Definition Debt Service Coverage Ratio (DSCR) Consumer Price Index (CPI) Prepare an Investor Package Top Down Approach Definition A top down approach definition is the act of seeking out securities by first looking at global economics, industry, and then individual companies. Finally,
See Also: Porter’s 5 Forces of Competition Core Competencies How to Write an Action Plan How to Turnaround a Company SWOT Analysis The SWOT Analysis – an acronym standing for Strengths, Weaknesses, Opportunities, and Threats – assesses a company’s competition in the desired field or market. This analysis serves as an excellent tool for decision-making, either
See Also: Supplier Power (one of Porter’s Five Forces) Signs a Company is in Trouble Problems When Experiencing Business Growth Threat of New Entrants Intensity of Rivalry Supplier Power Analysis When analyzing a given industry, all of the aforementioned factors regarding Porter a supplier power analysis may not apply. But some, if not many, certainly
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