Long Term Mindset
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Financial Statements Cheat Sheet ๐ If you're in business, you MUST understand how Financial Statements work.Use this cheat sheet to master the fundamentals.๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐3 Main Sections:๐ฐ ASSETS: What the company Owns๐ด LIABILITIES: What the company Owes to creditors๐ต EQUITY: The net value of the owner's claimโ FORMULA: Assets = Liabilities + Shareholder's Equity๐ PURPOSE: Track what a company OWNS (assets) and OWES (liabilities)๐ SIMILAR TO: Your Net Worth statementโฐ TIME: Point in Time Snapshot๐ข ACCOUNTING: Accrual๐ INCOME STATEMENTMain sections:๐ฐ REVENUE: Total Salesโ COST OF GOODS SOLD: The cost to deliver the product or service๐ฐ GROSS PROFIT: Revenue - Cost of Goods Soldโ OPERATING EXPENSES: All Overhead Costs๐ฐ OPERATING INCOME: Gross Profit - Operating Expensesโ OTHER INCOME: Money earned that is not core to the business๐ฐ PRE-TAX INCOME: Operating Income - Other Incomeโ INCOME TAX: Taxes paid to Governments๐ฐ NET INCOME: Pre-Tax Income - Income Tax๐ข SHARES OUTSTANDING: The total number of shares a company hasโ EARNINGS PER SHARE: Net Income / Shares Outstanding๐ PURPOSE: Track Income & Expenses๐ SIMILAR TO: Your Monthly Budgetโฐ TIME: Period of Time๐ข ACCOUNTING: Accrual๐ ๐๐๐๐๐๐๐๐๐ ๐๐ ๐๐๐๐ ๐ ๐๐๐๐3 Main sections:๐ฐ CASH FROM OPERATING ACTIVITIESAll of the cash flows from activities related to operating the business๐ฐ CASH FROM INVESTING ACTIVITIESThe cash movements from long-term assets๐ฐ CASH FROM FINANCING ACTIVITIESThe cash from all equity investments and debt from the company๐ PURPOSE: Track Cash Movements๐ SIMILAR TO: Your Checking Accountโฐ TIME: Period of Time๐ข ACCOUNTING: CashThis is just an overview of these 3 statements - Which financial statement interests you the most? Let me know in the comments section.FollowLong Term Mindsetfor more content like thisWant to master the basics of accounting (for free)?Enroll in our free, 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Check it out here (It's free) โhttps://lnkd.in/eKbRV7g6If this post was helpful, repost it โป๏ธ to share with your audience.
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Brian Feroldi
I demystify the stock market | Author, Speaker, Creator | 100,000+ investors read my free newsletter (see link)
1mo
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My accounting classes in college would have been 10x easier if I had this cheat sheet handy.
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Pareesa I.
๐ Experienced Finance & Accounts Professional | Driving Financial Excellence and Business Growth with Expertise in Financial Management, Reporting, and Analysis ๐๐ฐ
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I wish I had you as my teacher in college. ๐
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Natalia F.
Gestiรณn de Riesgos y Cumplimiento / Diseรฑo y Mejora de Procesos / BPM /Estrategia Corporativa / Speaker๐๏ธ / BB Lean Six Sigma/ CIA en Proceso/ Business Consultant.
1mo
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Very useful!The faster course than I could get!Thanks for sharing Long Term Mindset
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Tahir Ayaz
Corporate Finance
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Good one for those who belongs to finance field.
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Dr. Pranay Singh
Insurance Consultant at Bajaj Allianz Life |Aspiring Dentist and Tactical CIA Field Agent| Cybersecurity Learner
1mo
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Very Informative and knowledgeable content ๐ ๐ ๐
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Long Term Mindset
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๐ง๐ต๐ฒ ๐ฃ๐ฒ๐ฟ๐ถ๐ผ๐ฑ๐ถ๐ฐ ๐ง๐ฎ๐ฏ๐น๐ฒ ๐ผ๐ณ ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐ ๐ฒ๐๐ฟ๐ถ๐ฐ๐Post credit by: Josh Aharonoff, CPA Go and follow him!where Chemistry meets Profitability (and much more)...๐ฃ Help me spread Financial literacy by liking, commenting, and sharing this post!๐ฃ1๏ธโฃ OCFOperating Cash FlowNet Income + Other Non-Cash Items - Changes in Working Capital2๏ธโฃ FCFFree Cash FlowOperating Cash Flow - Capital Expenditures3๏ธโฃ CCCCash Conversion Cycle Days of Inventory Outstanding + Days of Sales Outstanding - Days of Payables Outstanding4๏ธโฃ NCFNet Cash FlowOperating Cash Flow + Investing Cash Flow + Financing Cash Flow5๏ธโฃ DCFDiscounted Cash FlowCF1 / (1+r)1 + CF2 / (1+r)2 + ... + CFn / (1+r)n, where CF is cash flow, r is the discount rate, and n is the number of periods.6๏ธโฃ PVPresent ValueCF / (1+r)^t, where CF is cash flow, r is the discount rate, and t is the number of periods.7๏ธโฃ FVFuture ValueCF x (1+r)^t, where CF is cash flow, r is the interest rate, and t is the number of periods.8๏ธโฃ PPPayback PeriodInitial Investment / Annual Cash Flow9๏ธโฃCRCash Ratio(Cash + Marketable Securities) / Current Liabilities๐ CBCash BurnCash from Operating Activities + Cash from Investing Activities1๏ธโฃ1๏ธโฃ UFCFUnlevered Free Cash Flow:EBIT x (1 - Tax Rate) + Depr & Amort - CapEx - Incr in Net Working Capital1๏ธโฃ2๏ธโฃ LFCFLevered Free Cash Flow:EBITDA - Taxes - Capital Expenditures - Changes in Net Working Capital - Interest Expense1๏ธโฃ3๏ธโฃ GPGross Profit Total Revenue - Cost of Goods Sold (COGS)1๏ธโฃ4๏ธโฃ EBITDAEarnings Before Interest Taxes Depr and AmortNet Income + Int Expense - Int Income + Taxes + Depr + Amort1๏ธโฃ5๏ธโฃ EBITDA (M)EBITDA MarginEBITDA / Revenue1๏ธโฃ6๏ธโฃ OINet Operating incomeGross Profit - Operating Expenses1๏ธโฃ7๏ธโฃ NINet Income Total Revenue - Total Expenses1๏ธโฃ8๏ธโฃ NIMNet Income Margin Net Profit / Revenue1๏ธโฃ9๏ธโฃ GPMGross Profit Margin Gross Profit / Revenue2๏ธโฃ0๏ธโฃ ROIReturn on Investment Net Profit / Total Investment2๏ธโฃ1๏ธโฃ ROEReturn on EquityNet Profit / Shareholders Equity2๏ธโฃ2๏ธโฃ ROAReturn on AssetsNet Profit / Total Assets2๏ธโฃ3๏ธโฃ NOINet Other IncomeOther Income - Other Expense2๏ธโฃ4๏ธโฃ EPSEarnings per Share (EPS) Net Profit / Total Shares Outstanding2๏ธโฃ5๏ธโฃ OMOperating MarginOperating Income / Revenue2๏ธโฃ6๏ธโฃ PEPrice-to-EarningsPrice per Share / EPS2๏ธโฃ7๏ธโฃ ROCEReturn on Capital EmployedOperating Profit / Capital Employedโฆand many more!Follow Long Term Mindset for more content like this.***P.S. Want to master the basics of accounting (for free)?I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Check it out here (It's free) โ https://lnkd.in/eKbRV7g6If you found this post useful, please repost โป๏ธ to share with your audience
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Long Term Mindset
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The Investing Risk PyramidThe classic definition of risk is measured in volatility, which is how much and how quickly the value of an investment can change.According to this definition of risk, here's how various assets stack up:HIGHER RISK- Futures- Options- Unprofitable stocks- Junk bonds- Commodities- Crypto- Precious MetalsMEDIUM RISK- Growth stocks- Small company stocks- Medium-rated bonds- Mutual funds- Rental real estateLOW RISK- Blue chip stocks- Investment grade bonds- US Treasury bonds and notesLOWEST RISK- Savings accounts- Money market funds- CDs- US Treasury bills Fixed annuitiesWith that said, here are two quote about risk that everyone should keep in mind."Risk comes from not knowing what you're doing." -- Warren Buffett"The biggest, least mentioned risk of all -- is not taking enough risk." -- David GardnerDo you think volatility is a good measure of risk?***โ Follow Long Term Mindset for more content like this.Want to master the basics of accounting (for free)?Enroll in our email-based course: Financial Statements SchoolGet started here (It's free) โ https://lnkd.in/eKbRV7g6If this post was helpful, repost it โป๏ธ to share with your audience.
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Long Term Mindset
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The Financial Due Diligence ChecklistValuable post from Nevena Miskovic Follow her!All important FDD checks and insights are in one place.Hope this can help you improve your knowledge of FDD.๐ ๐๐ฒ๐น๐ฝ ๐บ๐ฒ ๐๐ต๐ฎ๐ฟ๐ฒ ๐๐ต๐ฒ๐๐ฒ ๐ฒ๐๐๐ฒ๐ป๐๐ถ๐ฎ๐น ๐ฐ๐ต๐ฒ๐ฐ๐ธ๐ ๐๐ถ๐๐ต ๐๐ต๐ถ๐ ๐๐ฅ๐๐ ๐๐ต๐ฒ๐ฐ๐ธ๐น๐ถ๐๐.๐๐ผ ๐๐ผ๐ ๐น๐ถ๐ธ๐ฒ ๐๐ต๐ฒ ๐ฑ๐ผ๐๐ป๐น๐ผ๐ฎ๐ฑ๐ฎ๐ฏ๐น๐ฒ ๐ฃ๐๐ ๐๐ฒ๐ฟ๐๐ถ๐ผ๐ป? ๐๐ ๐บ๐ฒ ๐ผ๐ฟ ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐.๐๐ฒ๐ฟ๐ฒ ๐ถ๐ ๐๐ต๐ฎ๐ ๐๐ต๐ฒ ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐๐๐ฒ ๐๐ถ๐น๐ถ๐ด๐ฒ๐ป๐ฐ๐ฒ ๐๐ต๐ฒ๐ฐ๐ธ๐น๐ถ๐๐ ๐๐ป๐ฐ๐น๐๐ฑ๐ฒ๐:โถ๏ธ General checksโถ๏ธ Analytical proceduresโถ๏ธ Internal controls checkโถ๏ธ Property, plant, equipment, and intellectual property checksโถ๏ธ Inventories checkโถ๏ธ Account receivables checkโถ๏ธ Revenues checkโถ๏ธ Loans and interest expenses checkโถ๏ธ Account payables checkโถ๏ธ Commitments and contingencies checkโถ๏ธ Salaries, employee costs checkโถ๏ธ OPEX checkโถ๏ธ Equity checkโถ๏ธ Loans and financial liabilities checkโถ๏ธ Intercompany transactions checkFollow Long Term Mindset for more content like this.***P.S. Want to master the basics of accounting (for free)?I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Check it out here (It's free) โ https://lnkd.in/eKbRV7g6If you found this post useful, please repost โป๏ธ to share with your audience
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Assets Explained Simply:Assets are any resource owned by a company that can be used to produce economic value.Assets are ordered by LIQUIDITY, which is the speed at which they can be converted into cash.There are two main categories of assets:โข CURRENT ASSETS: are expected to be used within one year.โข LONG-TERM ASSETS: have a useful life of more than 1 year.Management teams have complete control over the categories that they use, but here are some of the more popular ways that assets are categories:CURRENT ASSETS ๐ดCASH & CASH EQUIVALENTSWhat: Cash / T-bills / CDs <3 Month MaturityKind of Like: Your Checking AccountingMARKETABLE SECURITIESWhat: Liquid Equity / Bonds Expected To Be Used In <1 YearKind of Like: CDs that mature in <1 yearACCOUNTS RECEIVABLE:What: Money That Is Owed By CustomersKind of Like: You paid for a friend's dinner, and they owe you moneyINVENTORY:What: Raw Materials & Finished Goods Available For SaleKind of Like: Unsold items in a personal Etsy storeOTHER CURRENT ASSETS:What: A Catch-All Category Of Assets Expected To Last <1 YearKind of Like: Homeowners insurance, car insurance, health insuranceLONG-TERM ASSETS ๐ดLONG-TERM INVESTMENTSWhat: Investments The Company Intends To Hold For >1 YearKind of Like: Your Retirement FundFIXED ASSETS:What: Land / Machinery / Equipment / Buildings / Durable AssetsKind of Like: Your house or carGOODWILL:What: Premiums Paid To Acquire Other BusinessesKind of Like: Your reputationOTHER LONG-TERM ASSETS:What: Catch-All Category Of Assets Expected to Last >1 YearKind of Like: A diploma or advanced DegreeWhat other common categories of assets do you see?***โ Follow Long Term Mindset for more content like this.Want to master the basics of accounting (for free)?Enroll in our email-based course: Financial Statements SchoolGet started here (It's free) โ https://lnkd.in/eKbRV7g6If this post was helpful, repost it โป๏ธ to share with your audience.
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Long Term Mindset
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The CFOs Guide to Managing the Finance Function on ONE page!Incredible post by Anders Liu-Lindberg, follow him!Like, comment, and share to help spread the word about this FREE resource!If you want the PDF in high-quality resolution then let us know ๐Help CFOs and senior finance leaders get a better grip on how to drive forward their finance function successfully.Help young and up-and-coming finance and accounting professionals get a great understanding of all the parts of the finance function.In this guide, we cover the following...โ The ten main responsibilities of a CFOโ The ten areas to excel with each responsibilityโ The ten KPIs to measure the success of each areaโ 8 types of CFO a company may needโ The new mindset of a modern CFOโ The difference between a CEO and CFONever has so much knowledge for CFOs been shared on one page!And if in doubt here are ten main responsibilities...1๏ธโฃ Financial planning and analysis2๏ธโฃ Financial reporting3๏ธโฃ Risk management4๏ธโฃ Cash management5๏ธโฃ Capital management6๏ธโฃ Tax management7๏ธโฃ Investor relations8๏ธโฃ Corporate governance9๏ธโฃ Strategic planning๐ Leadership and managementWhat would you add to this CFOs Guide to Managing the Finance Function?Any areas you think we've missed?Or anything you need to be added to excel in each of the areas?Finally, do you feel any critical KPIs have been left out?Let's help CFOs take better charge of the finance function!Follow Long Term Mindset for more content like this.***P.S. Want to master the basics of accounting (for free)?I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Check it out here (It's free) โ https://lnkd.in/eKbRV7g6If you found this post useful, please repost โป๏ธ to share with your audience
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Long Term Mindset
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FINANCIAL RATIOS โUse these 20 ratios to analyze financial statements - fast.LIQUIDITY:Net Working Capital: Current Assets โ Current LiabilitiesCurrent Ratio: Current Assets โ Current LiabilitiesQuick Ratio: Cash โ Marketable Securities โ Receivables โ Current LiabilitiesACTIVITY:Accounts Receivable Turnover: Net Credit Salesโ Accounts ReceivableAverage Collection Period: 365 โ Accounts Receivable TurnoverInventory Turnover: Cost Of Goods Sold โ Average InventoryAverage Age of Inventory: 365โ Inventory TurnoverTotal Asset Turnover: Net Sales โ Average Total AssetsLEVERAGE:Debt Ratio: Total Debt โTotal AssetsDebt To Equity Ratio: Total Liabilities โ Stockholders' EquityTimes Interest Earned: Earnings Before Interest & Taxes โ Interest ExpenseMARKET VALUE:Earnings Per Share: Net Income - Preferred Dividends โ Common Stock Price/Earnings Ratio: Market Price Per Share โ Earnings Per ShareBook Value: Stockholders Equity - Preferred Stock โ Common Stock Dividend Yield: Dividends Per Shareโ Market Price Per Share Dividend Payout: Dividends Per Share โEarnings Per SharePROFITABILITY:Gross Margin: Gross Profit โ Net SalesProfit Margin: Net Income โ Net SalesReturn On Total Assets: Net Income โ Average Total AssetsReturn On Common Equity: Net Incomeโ Common EquityWatch how these ratios change over time to analyze financial statements quickly.Was this helpful? Let me know in the comments section below!***โ Follow Long Term Mindset for more content like this.Want to master the basics of accounting (for free)?Enroll in our email-based course: Financial Statements SchoolGet started here (It's free) โ https://lnkd.in/eKbRV7g6If this post was helpful, repost it โป๏ธ to share with your audience.
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