Nevena Miskovic on LinkedIn: #finance #ceo #cfo #salescoaching #enterpreneur | 598 comments (2024)

What are the types of Scenario analysis?Here are my favorite 7 types.1️⃣ 𝗕𝗲𝘀𝘁 / 𝗪𝗼𝗿𝘀𝘁 𝗖𝗮𝘀𝗲 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼Description: The best case scenario assumes the most favorable conditions for the business. Involves optimistic assumptions like sales growth, market conditions, etc. The worst case considers the worst possible conditions that could reasonably occur. Purpose: Used for risk assessment and to ensure that the business can survive under adverse conditions.2️⃣ 𝗦𝗲𝗻𝘀𝗶𝘁𝗶𝘃𝗶𝘁𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀Description: This involves changing one key factor at a time (like sales volume, price, cost, etc.) to see how sensitive the model is to changes in that factor.Purpose: Helps in understanding which variables have the most significant impact on the financial outcomes.3️⃣ 𝗕𝗿𝗲𝗮𝗸-𝗘𝘃𝗲𝗻 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀Description: This scenario determines the point at which total costs and total revenue are equal, i.e., there is no net loss or gain.Purpose: Used to understand the minimum performance level required to avoid losses.4️⃣ 𝗦𝘁𝗿𝗲𝘀𝘀 𝗧𝗲𝘀𝘁𝗶𝗻𝗴Description: Involves applying extreme conditions or shocks to a single factor or a combination of factors in the model (e.g., sudden market crash, rapid interest rate changes).Purpose: To test the resilience of the financial model under extreme but plausible conditions.5️⃣ 𝗠𝗼𝗻𝘁𝗲 𝗖𝗮𝗿𝗹𝗼 𝗦𝗶𝗺𝘂𝗹𝗮𝘁𝗶𝗼𝗻Description: A more complex form of scenario analysis that uses random sampling and statistical modeling to estimate possible outcomes.Purpose: To account for risk and uncertainty in quantitative analysis and decision-making.6️⃣ 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆-𝗦𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼𝘀Description: Tailored to specific industries, these scenarios take into account factors unique to a particular sector (like regulatory changes in pharmaceuticals, technology shifts in IT, etc.).Purpose: To provide more detailed and relevant insights for businesses operating in specific sectors.7️⃣ 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗜𝗺𝗽𝗮𝗰𝘁 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀Description: Examines the impact of potential changes in laws or regulations on the financial model.Purpose: To prepare for changes in the regulatory environment.------------📌 In finance, we can't level up our skills and careers without knowing how to build sustainable models. Grab the Modeling Package here:https://lnkd.in/dp6FnzQc✔ 𝟲𝗵+ of Video Materials (35 Lessons in 5 Modules)✔ 𝟱𝟬+ Finance Models in Excel✔ 𝟯𝟯𝟬+ Pages of Instructions in PDF✔ 𝟯𝟬+ Bonus Materials✔ 𝟭𝟬+ Languages subtitle#finance

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Full Key Performance Indicators list.𝗪𝗮𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁𝗲𝗿 𝗶𝗻 𝗵𝗶𝗴𝗵 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻? 𝗝𝘂𝘀𝘁 𝗹𝗲𝗮𝘃𝗲 a 𝗰𝗼𝗺𝗺𝗲𝗻𝘁 𝗞𝗣𝗜 𝗼𝗿 𝘀𝗶𝗺𝗽𝗹𝘆 𝗗𝗠 𝗺𝗲.𝗣𝗥𝗢𝗙𝗜𝗧𝗔𝗕𝗜𝗟𝗜𝗧𝗬 𝗞𝗣𝗜𝘀→Ebitda margin→Gross profit margin→Net profit margin→Return on equity→Return on capital employed→Return on assets→Revenue per employee→Ebitda per employee→Net profit per employee𝗘𝗙𝗙𝗜𝗖𝗜𝗘𝗡𝗖𝗬 𝗞𝗣𝗜𝘀→Days sales outstanding→Days inventory outstanding→Days payable outstanding→Ccc days→Assets turnover→Fixed assets turnover→Ebitda to interest coverage→Total cost per employee→Overhead costs per employee𝗟𝗜𝗤𝗨𝗜𝗗𝗜𝗧𝗬 𝗞𝗣𝗜𝘀→Net working capital→Current assets – current liabilities→Current ratio→Quick ratio→Cash ratio→Working capital turnover𝗙𝗜𝗡𝗔𝗡𝗖𝗜𝗔𝗟 𝗦𝗧𝗥𝗨𝗖𝗧𝗨𝗥𝗘 𝗞𝗣𝗜𝘀→Equity ratio→Debt ratio→Interest expense in loans→Total cogs in revenue→Variable cogs in revenue→Fixed cogs in revenue𝗖𝗔𝗦𝗛 𝗞𝗣𝗜𝘀→Operating cash flow→Free cash flow→Cash conversion cycle→Free cash flow rate→Free cash flow realization→Cash ratio𝗜𝗡𝗩𝗘𝗦𝗧𝗢𝗥 / 𝗩𝗔𝗟𝗨𝗔𝗧𝗜𝗢𝗡𝗞𝗣𝗜𝘀→Price-to-Earnings (P/E)→Price-to-Sales (P/S) Ratio→Price-to-Book (P/B) Ratio→Enterprise Value-to-EBITDA (EV/EBITDA)→Price-to-Cash Flow (P/CF) Ratio→Dividend Yield______________________📌 These KPIs are the backbone of the 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗖𝗼𝘂𝗿𝘀𝗲. If you want to transform your career in finance, follow these 35 lessons:👉https://lnkd.in/dyMzqA73Happy practicing!hashtag#KPI hashtag#KPIs

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𝗛𝗼𝘄 𝗧𝗼 𝗘𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝗥𝗘𝗩𝗘𝗡𝗨𝗘𝗦Ensure GAAP compliance. Look at the growth rate. An increase is generally positive, indicating growing business.𝗖𝗢𝗦𝗧 𝗢𝗙 𝗚𝗢𝗢𝗗𝗦 𝗦𝗢𝗟𝗗Compare COGS as % of revenue. If it's increasing, it might mean the production is rising faster than its pricing power.Increasing the gross marking margin means pricing power and cost control.𝗦𝗔𝗟𝗔𝗥𝗜𝗘𝗦If the salary expense is rising faster than revenues, it might suggest the company is becoming less efficient in itscosts𝗦𝗘𝗟𝗟𝗜𝗡𝗚 𝗔𝗡𝗗 𝗠𝗔𝗥𝗞𝗘𝗧𝗜𝗡𝗚Analyze Absolute amount, % in revenues, growth and effectiveness. Cost increase should result in revenue increase.𝗚&𝗔Monitor this as a % of revenues. A rising % might indicate in the company's operations𝗘𝗕𝗜𝗧𝗗𝗔Investors like EBITDA because it focuses on operational performance. Compare across peers for a better understanding𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗮𝗺𝗼𝗿𝘁𝗶𝘇𝗮𝘁𝗶𝗼𝗻D&A to CAPEX ratio over time and compare with peers. Approach useful lifes of assets.𝗜𝗡𝗧𝗘𝗥𝗘𝗦𝗧Calculatecoverage ratio (EBITDA/Interest Expense), analyze trends and compare with peers.𝗣𝗥𝗢𝗙𝗜𝗧 𝗕𝗘𝗙𝗢𝗥𝗘 𝗧𝗔𝗫𝗔𝗧𝗜𝗢𝗡Evaluate operating leverage and compare the growth rate of revenue to the growth rate of PBT and trends in profit rates.𝗧𝗔𝗫Understand the effective tax rate). If this is fluctuating significantly, delve into why. Any benefit from incentives𝗡𝗘𝗧 𝗣𝗥𝗢𝗙𝗜𝗧Look at the net profit margin (Net Income/Revenues) and compare it over time and against peers.___________________________📌 Financial analysis is only one part of the 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗠𝗼𝗱𝗲𝗹𝗶𝗻𝗴 Course. Check all 5 modules, 35 lessons, and 50 modeling spreadsheets:https://lnkd.in/ddH693WpStart growing your career and income._________________________#incomestatement

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The essential KPIs for accounting, tax, and audit firms.KPI• Revenue per accountant• Time utilization• Gross hourly rate• Actual billing rate• Gross profit• Gross profit rate• Net profit • Net profit rate• Profit per accountant• Revenue churn rate+ Formulas + Meaning.________________________________Join Corporate Finance Learning Platform:👉https://lnkd.in/dyfrW-GyWhat is in?💠 6 Hours of video course sessions💠 50+ finance modeling sheets, editable in Excel💠 330 pages of PDF finance modeling instructions💠 30+ Pieces of actionable content: visuals, handbooks.#accounting #finance

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These three concepts provide a full view of financial performance𝗣𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 focuses on generating earnings, 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 ensures a company's ability to meet short-term obligations, and 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆 evaluates how well a company uses its resources to generate outputs.Learn how to calculate and analyze key ratio numbers of those 3 concepts.Comment or DM for high-resolution PDF.___________________________📌 If you are ready for the first steps to build your own financial model start with these 35 lessons: https://lnkd.in/dY-BpUEtGood luck!___________________________

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Here is a quick analysis of the balance sheet:𝗖𝘂𝗿𝗿𝗲𝗻𝘁 𝗮𝘀𝘀𝗲𝘁𝘀→ calculate the working capital (current assets - current liabilities) to assess the company's liquidity.𝗖𝗮𝘀𝗵→ calculate cash to short-term liabilities to review any potential liquidity issues in the very short term.𝗔𝗰𝗰𝗼𝘂𝗻𝘁 𝗿𝗲𝗰𝗲𝗶𝘃𝗮𝗯𝗹𝗲𝘀→calculate DSO to see how quickly the company collects cash𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝗶𝗲𝘀→ calculate DIO to see how the company is efficient in converting inventories into cash𝗙𝗶𝘅𝗲𝗱 𝗮𝘀𝘀𝗲𝘁𝘀→ check the efficiency with fixed asset turnover evaluation→ evaluate fair value, especially for intangibles.𝗖𝘂𝗿𝗿𝗲𝗻𝘁 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀→ calculate the current ratio and quick ratio to assess liquidity𝗔𝗰𝗰𝗼𝘂𝗻𝘁 𝗽𝗮𝘆𝗮𝗯𝗹𝗲𝘀→ calculate DPO to track how quickly company pays a bill and tends to prolong terms.𝗦𝗵𝗼𝗿𝘁 𝘁𝗲𝗿𝗺 𝗱𝗲𝗯𝘁→ top priority in payment. make sure in company's ability to meet its immediate financial obligations 𝗡𝗼𝗻-𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗱𝗲𝗯𝘁→ evaluate the debt-to-asset ratio to determine solvency𝗘𝗾𝘂𝗶𝘁𝘆→ calculate the equity ratio (equity / total assets) to understand stability→ ROE (net income/equity) to understand the profitability▶️ 𝗠𝗮𝗸𝗲 𝘀𝘂𝗿𝗲 𝘆𝗼𝘂 𝗱𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻 𝗿𝗮𝘁𝗶𝗼 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀1. understand the meaning of the ratio2. result interpretation3. compare with last period, budget and industry peers4. action plan___________________________📌 Bad planning → bad results. Good planning → good results. What is your choice? Level up your planning skills: https://lnkd.in/dKCPenqxHappy practicing!___________________________#finance #accounting #balancesheet

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