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Financial Statements Primer

Financial Statements Primer. Audrey Hicks CFO Outdoor Research, Inc. Why do I care? . Manage People Manage Money (Budget). Other People’s Money (OPM). You matter Be Responsible. What are Financial Statements?. Income Statement = P&L = Profit and Loss

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Financial Statements Primer

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  1. Financial Statements Primer Audrey Hicks CFO Outdoor Research, Inc.

  2. Why do I care? Manage People Manage Money (Budget)

  3. Other People’s Money (OPM) You matter Be Responsible

  4. What are Financial Statements? • Income Statement = P&L = Profit and Loss • Activity based over a period of time • Year Ended December 31, 2013 • Balance Sheet • Value at a single point in time • December 31, 2013

  5. Who makes the rules anyways? GAAP The Gap? Generally Accepted Accounting Principles

  6. Income Statement Where does money come from? Revenue/Sales/Turnover = Selling Price or MSRP • Less discounts Net Revenue • Less Cost of Goods Sold (COGS) Gross Margin-money I can spend • Gross Margin % (GM/Net Revenue)

  7. Income Statement Where does the money go? • Operating expenses/costs (OPEX) • Payroll • Marketing/Tradeshow • Rent/Utilities • Travel • EBITDA • Interest • Taxes • Depreciation/Amortization • Net Income/(Loss)

  8. A Simple Example

  9. Cash vs. Expense

  10. Capital vs. Operating Fixed/Capital Asset • Useful life greater than 1 year • Meets an internally set dollar amount $1,000-$5,000 • Depreciates over useful life-non cash charge • Matching of revenue and expenses over time

  11. Balance Sheet Assets (things I own or have future value to me): • Cash • Accounts Receivable • Inventory • Fixed Assets (Capital Assets)

  12. Balance Sheet Liabilities(things I owe): • Accounts Payable (bills I owe now) • Accrued Liabilities (bills I will owe later) • Bank Debt

  13. Balance Sheet Equity (investor/shareholder value): • Initial investment • Net Income

  14. Put it all Together Income Statement • Revenue • COGS • Gross Margin • Operating Expenses • EBITDA • Interest/Taxes/Depr. • Net Income Balance Sheet • Assets • Liabilities • Equity • Initial Investment • Net Income

  15. OIWC MENTORING • BUSINESS FINANCIALS INCOME STATEMENT MARGIN BUDGETS BASICS FOR COMPETENCY • PRESENTED BY • ALI SACASH-JOHNON

  16. WHAT GOES INTO AN INCOME STATEMENT OR P&L SALES = Price x Quantity COST of GOODSSOLD OPERATING EXPENSES GROSS PROFIT = Sales - COGS INCOME TAX PRE TAX PROFIT NET INCOME

  17. WHAT GOES INTO MARGIN & PRICING MSRP WHOLESALE COST MARK DOWNS GROSS MARGIN SG&A NET MARGIN CONTRIBUTION MARGIN

  18. HOW TO LOOK AT BUDGETS WHAT HAPPENED WHAT THE PLAN WAS OFF BY HOW MUCH + / - HOW WE ADAPT P&L

  19. BASIC TIPS FOR COMPETENCY RETURN ON INVESTMENT (R.O.I.) VARIANCE PERCENT CHANGE (DELTA) MORE ON HOW TO IMPROVE

  20. HOW TO CALCULATE RETURN ON INVESTMENT (R.O.I.) ( What you Earned - What you Spent ) R.O.I. % X 100= What you Spent

  21. HOW TO CALCULATE VARIANCE ACTUAL (x 100) = % ACTUAL BUDGET = $ VARIANCE BUDGET

  22. HOW TO CALCULATE PERCENT CHANGE OR DELTA ( ) ( NEW - OLD ) X 100 = % OLD

  23. ADVICE FOR YOU HOW TO IMPROVE YOUR FINANCE SKILLS 1. TAKE A BUSINESS 101 CLASS 2. TAKE A MARKETING 101 FINANCE CLASS 3. THE BUSINESS OWNER’S GUIDE TO ACHIEVING FINANCIAL SUCCESS - DAVID DURYEE RETAIL MATH MADE SIMPLE - DMS RETAIL

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