Nicolas Boucher Online on LinkedIn: Cash vs EBIT Here is a list of 5 Key Differences between Cash and EBIT.… (2024)

📊 Decoding the Statement of Cash Flows: Accrual Basis or Cash Basis? 💰The Statement of Cash Flows is a crucial financial document that showcases a company's cash inflows and outflows during a specific period. But here's the interesting bit: it's neither solely accrual nor purely cash basis; instead, it combines elements of both.🔍 Accrual Basis vs. Cash Basis:Accrual Basis Accounting records transactions when they occur, regardless of the actual cash inflow or outflow at that moment. It recognizes revenues when earned and expenses when incurred, irrespective of cash movement.Cash Basis Accounting, on the other hand, records transactions only when cash changes hands, ignoring revenue earned or expenses incurred until the cash is received or paid.So, where does the Statement of Cash Flows fit in?💡 The Statement of Cash Flows focuses on actual cash movements, detailing operating, investing, and financing activities. It provides a snapshot of cash inflows and outflows during a specific period, showcasing how a company generates and utilizes cash.However, it also reconciles these cash movements with the company's accrual-based net income, bridging the gap between the accrual and cash-basis methods.Understanding the Statement of Cash Flows is vital for investors, analysts, and businesses, as it presents a comprehensive view of a company's liquidity and operational efficiency.What's your perspective on the interplay between accrual and cash basis accounting within the Statement of Cash Flows? Share your thoughts below!#StatementOfCashFlows #AccrualVsCash #FinancialAccounting #BusinessInsights

𝗙𝗶𝗿𝘀𝘁 𝘁𝗶𝗺𝗲 𝗰𝗿𝗲𝗮𝘁𝗶𝗻𝗴 𝗮 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁?Here’s how we do it:1️⃣ List all cash items at the start of the period2️⃣ Input expected cash inflows and outflows from income and expense3️⃣ Input other cash inflows and outflows4️⃣ [𝗢𝗽𝘁𝗶𝗼𝗻𝗮𝗹 𝗯𝘂𝘁 𝗿𝗲𝗰𝗼𝗺𝗺𝗲𝗻𝗱𝗲𝗱] Compare forecasted figures against actual figuresThese steps are also 𝘀𝗰𝗮𝗹𝗮𝗯𝗹𝗲 𝗳𝗼𝗿 𝘄𝗲𝗲𝗸𝗹𝘆 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝘀Businesses using 𝗮𝗰𝗰𝗿𝘂𝗮𝗹 𝗯𝗮𝘀𝗶𝘀 need a 𝗺𝗼𝗿𝗲 𝗰𝗼𝗺𝗽𝗿𝗲𝗵𝗲𝗻𝘀𝗶𝘃𝗲 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁 to account for trade receivables/payables, credit card charges, and non-cash items… much like a Statement of Cash Flows.Need help creating a cash flow forecast? Book a call with us at calendly.com/lexvirtualcfo or email us at lex@lexvirtualcfo.comFollow us for more accounting and business content#lexvirtualcfo #bookkeepingmadebetter #cashflowforecast

"Operating cash-flows" are highly appreciated by users of financial statements. To some extent, the financial strength of a business depends on its ability to generate recurring and growing cash-flows from its operations. In terms of presentation, the operating cash-flows are displayed in a separate section within the statement of cash-flows. As per financial reporting standards, an operating cash-flow is either direct or indirect. The indirect method to presenting operating cash-flows starts with net income and adds back a series of non cash expenses such as depreciation charges and stock based compensation. Adjustment for changes in working capital accounts, along with gains or losses on disposal of fixed assets are also required to get the operating cash-flows' ending balance. Under the direct method for the presentation of operating CF, no adjustments are required at all. The direct operating cash-flows are instead presented as list of direct inflows and outflows of cash in relation with the business' main operating cycle such as cash from sales, cash paid to employees, cash paid to suppliers, cash paid to tax authorities and bank-related outflows ! 👌 #FP&A#Financefordummies#dailytips#

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How to make super simple and 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝘁 𝗣&𝗟 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁. Let's see this modeling flow.𝗪𝗮𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁𝗲𝗿 𝗶𝗻 𝗵𝗶𝗴𝗵 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻? 𝗝𝘂𝘀𝘁 𝗹𝗲𝗮𝘃𝗲 𝗣𝗟 𝗶𝗻 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀 𝗼𝗿 𝗗𝗠 𝗺𝗲. 𝗜'𝗹𝗹 𝘀𝗲𝗻𝘁 𝗶𝘁 𝘁𝗼 𝘆𝗼𝘂. This is my 13 steps:1. 𝗣&𝗟 𝗟𝗮𝘆𝗼𝘂𝘁. Define your Functional PnL layout with lines2. 𝗙𝗼𝗿𝗺𝘂𝗹𝗮𝘀. Add formulas for aggregate categories like gross profit, EBIT, EBITDA, Tax, Net income...3. 𝗦𝘂𝗽𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝘀𝗵𝗲𝗲𝘁𝘀. Open supporting sheet for each important line4. 𝗥𝗲𝘃𝗲𝗻𝘂𝗲𝘀. Make revenue forecast for each type of revenues or per customers, based on assumptions such as expected growth rate, customer retention rate, churn rate, pipeline customers, new expected customers, new products, pricing adjustments etc.5. 𝗖𝗢𝗚𝗦. Based on gross profit rate per type of revenue, product, service line, make estimate of gross profit and COGS. First calculate GP. Then deduct GP from Revenues and you get a COGS.6. 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝘀. List all employees and estimate movements in salaries and bonuses amount. Define all assumptions for salaries growth. You can split these cots to direct vs indirect.7. 𝗗&𝗔. Make two depreciation schedules, for current assets and new assets, and make calculation of costs based on (remaining) useful life8. 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀. Existing loans: Take expenses from loan scheduleNew loans: Make your schedule and forecast interest9. 𝗙𝗶𝘅𝗲𝗱 𝗰𝗼𝘀𝘁𝘀. List all expenses per months from your trail balance and make forecast, assuming some historical growth rate10. 𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗰𝗼𝘀𝘁𝘀. List all historical expenses and make forecast. Theses costs are usually forecasted as % of revenues11. 𝗜𝗻𝗽𝘂𝘁 𝗿𝗲𝘃𝗲𝗻𝘂𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted revenues from Revenues sheet to this PnL12. 𝗜𝗻𝗽𝘂𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted expenses fromrelated sheets to this PnL. Apply corporate tax rate on income before tax13. 𝗧𝗮𝘅. Apply corporate tax rate on income before taxI designed a Finance modeling package with 50+ sheets and 250 pages of instructions to help finance pros to skyrocket career and business. Have a look here:https://lnkd.in/dZD5QNfh#profit #modeling #forecast #budget

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How to make super simple and 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝘁 𝗣&𝗟 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁. Let's see this modeling flow.𝗪𝗮𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁𝗲𝗿 𝗶𝗻 𝗵𝗶𝗴𝗵 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻? 𝗝𝘂𝘀𝘁 𝗹𝗲𝗮𝘃𝗲 𝗣𝗟 𝗶𝗻 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀 𝗼𝗿 𝗗𝗠 𝗺𝗲. 𝗜'𝗹𝗹 𝘀𝗲𝗻𝘁 𝗶𝘁 𝘁𝗼 𝘆𝗼𝘂. This is my 13 steps:1. 𝗣&𝗟 𝗟𝗮𝘆𝗼𝘂𝘁. Define your Functional PnL layout with lines2. 𝗙𝗼𝗿𝗺𝘂𝗹𝗮𝘀. Add formulas for aggregate categories like gross profit, EBIT, EBITDA, Tax, Net income...3. 𝗦𝘂𝗽𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝘀𝗵𝗲𝗲𝘁𝘀. Open supporting sheet for each important line4. 𝗥𝗲𝘃𝗲𝗻𝘂𝗲𝘀. Make revenue forecast for each type of revenues or per customers, based on assumptions such as expected growth rate, customer retention rate, churn rate, pipeline customers, new expected customers, new products, pricing adjustments etc.5. 𝗖𝗢𝗚𝗦. Based on gross profit rate per type of revenue, product, service line, make estimate of gross profit and COGS. First calculate GP. Then deduct GP from Revenues and you get a COGS.6. 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝘀. List all employees and estimate movements in salaries and bonuses amount. Define all assumptions for salaries growth. You can split these cots to direct vs indirect.7. 𝗗&𝗔. Make two depreciation schedules, for current assets and new assets, and make calculation of costs based on (remaining) useful life8. 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀. Existing loans: Take expenses from loan scheduleNew loans: Make your schedule and forecast interest9. 𝗙𝗶𝘅𝗲𝗱 𝗰𝗼𝘀𝘁𝘀. List all expenses per months from your trail balance and make forecast, assuming some historical growth rate10. 𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗰𝗼𝘀𝘁𝘀. List all historical expenses and make forecast. Theses costs are usually forecasted as % of revenues11. 𝗜𝗻𝗽𝘂𝘁 𝗿𝗲𝘃𝗲𝗻𝘂𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted revenues from Revenues sheet to this PnL12. 𝗜𝗻𝗽𝘂𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted expenses fromrelated sheets to this PnL. Apply corporate tax rate on income before tax13. 𝗧𝗮𝘅. Apply corporate tax rate on income before taxI designed a Finance modeling package with 50+ sheets and 250 pages of instructions to help finance pros to skyrocket career and business. Have a look here:https://lnkd.in/dZD5QNfh#profit #modeling #forecast #budget

How to make super simple and 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝘁 𝗣&𝗟 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁. Let's see this modeling flow.𝗪𝗮𝗻𝘁 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁𝗲𝗿 𝗶𝗻 𝗵𝗶𝗴𝗵 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻? 𝗝𝘂𝘀𝘁 𝗹𝗲𝗮𝘃𝗲 𝗣𝗟 𝗶𝗻 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀 𝗼𝗿 𝗗𝗠 𝗺𝗲. 𝗜'𝗹𝗹 𝘀𝗲𝗻𝘁 𝗶𝘁 𝘁𝗼 𝘆𝗼𝘂. This is my 13 steps:1. 𝗣&𝗟 𝗟𝗮𝘆𝗼𝘂𝘁. Define your Functional PnL layout with lines2. 𝗙𝗼𝗿𝗺𝘂𝗹𝗮𝘀. Add formulas for aggregate categories like gross profit, EBIT, EBITDA, Tax, Net income...3. 𝗦𝘂𝗽𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝘀𝗵𝗲𝗲𝘁𝘀. Open supporting sheet for each important line4. 𝗥𝗲𝘃𝗲𝗻𝘂𝗲𝘀. Make revenue forecast for each type of revenues or per customers, based on assumptions such as expected growth rate, customer retention rate, churn rate, pipeline customers, new expected customers, new products, pricing adjustments etc.5. 𝗖𝗢𝗚𝗦. Based on gross profit rate per type of revenue, product, service line, make estimate of gross profit and COGS. First calculate GP. Then deduct GP from Revenues and you get a COGS.6. 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝘀. List all employees and estimate movements in salaries and bonuses amount. Define all assumptions for salaries growth. You can split these cots to direct vs indirect.7. 𝗗&𝗔. Make two depreciation schedules, for current assets and new assets, and make calculation of costs based on (remaining) useful life8. 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀. Existing loans: Take expenses from loan scheduleNew loans: Make your schedule and forecast interest9. 𝗙𝗶𝘅𝗲𝗱 𝗰𝗼𝘀𝘁𝘀. List all expenses per months from your trail balance and make forecast, assuming some historical growth rate10. 𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗰𝗼𝘀𝘁𝘀. List all historical expenses and make forecast. Theses costs are usually forecasted as % of revenues11. 𝗜𝗻𝗽𝘂𝘁 𝗿𝗲𝘃𝗲𝗻𝘂𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted revenues from Revenues sheet to this PnL12. 𝗜𝗻𝗽𝘂𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀 𝗶𝗻 𝗣&𝗟. Transfer forecasted expenses fromrelated sheets to this PnL. Apply corporate tax rate on income before tax13. 𝗧𝗮𝘅. Apply corporate tax rate on income before taxI designed a Finance modeling package with 50+ sheets and 250 pages of instructions to help finance pros to skyrocket career and business. Have a look here:https://lnkd.in/dZD5QNfh#profit #modeling #forecast #budget

In accounting, impairment refers to an asset's value decline beyond its anticipated future cash flows. This can result from technological shifts, economic changes, or unforeseen events. For instance, a seismic event like an earthquake could devalue property and equipment, impacting a company's financials. 📉📊It's important to note that not all assets are susceptible to impairment. Certain items like inventories and deferred tax assets are exempt from this consideration. 📦📈🌟 Here's a real-life illustration: Imagine Hightech Express experiencing reduced equipment usage due to the pandemic. The recorded value is $2,600,000, but the recoverable amount is only $1,350,000. Consequently, an impairment loss of $1,250,000 ($2,600,000 - $1,350,000) is recognized. Writing off this loss ensures accurate financial reporting and prevents inflated figures. 💼📉International Accounting Standard 36 outlines the framework for identifying impairment losses. This standard requires companies to routinely evaluate assets for impairment, considering internal and external indicators of potential devaluation. 📊🔍📣 Require assistance with accounting insights? Contact us at (888) 320-0220 or schedule a complimentary phone consultation via https://lnkd.in/g8BSkAR. Let's maintain accurate financial records together! 📞🗂️#ImpairmentLoss#AssetValuation#AccountingInsights#accounting#debtfreegoals#businessowner#CEO#financialadvisor#financialplanning#bookkeeper#internationalfinancialreportingstandards#internationalfinance#cashflows#quarterlyreport#accountingtips#payrollservices#payrollmanagement#bookkeeping#QuickBooks#payroll#quickbooksonline#financialstatements#cashflow#financialreport#auditingservices#businesssuccess

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P&L Forecast Model

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Check out this article that talks about how to read and understand a cash flow statement.https://lnkd.in/gCCUcMDtIf you have any questions,Call Us: 843-509-7466or Email Us: info@tldbookkeepingandtax.com

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Cash vs EBITHere is a list of 5 Key Differences between Cash and EBIT.If you have a hard time understanding the difference between Cash and EBIT, I am here to help.First let's look at the definition:💵 Cash is the actual money you have on hand.Cash Flow is the cash inflow less the cash outflow over a specific period.⚖️ EBIT is a measure of profitability expressing the difference between revenue and expenses over a period.Now let's look are the 5 key differences:1. Cash is a tangible asset that can be used to pay bills or make investments, while EBIT is an accounting metric which measures a company's profitability.2. Cash can be impacted by factors such as timing of payments or collections, while EBIT is a more stable metric that is not as susceptible to timing differences.3. Cash is important for short-term liquidity, while EBIT is important for evaluating long-term profitability.4. Cash is more straightforward and easier to understand than EBIT, which can be influenced by accounting treatments and other factors.5. Cash can be impacted by factors such as inventory management or capital expenditures, while EBIT is not affected by these operational decisions.👉 What do you think is more important? EBIT or Cash?-----------------------------------------

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