SHOW & CHAPTER 41: FINANCIAL SCORECarDS YOU CAN USE - WILLIAM EASTMAN

A Financial Scorecard is a measure of the impact of Operations, Customers, and People.

A company's profitability is a function of how well the owner / executive utilizes current resources to build and deliver its offer, managing the entire customer engagement process, and the ability to staff the organization with talent that makes an impact

Show Objective


EPISODE 201: Summary
Perhaps we should have started here, but I thought it was better to cover all the issues related to creating a Financial Scorecard so today is more a summary; a pulling together of the information in a way you have real-time data to make critical business decisions.

Topics:

• Revenue KPI's
• Profit KPI's
• Investment KPI's

EPISODE 202: Revenue Kritical Performance Indicators
All businesses need an inflow of revenue to survive. The question is how well you are living within your means. The management of cash flow is critical and the following are some of the elements you can use to understand what is happening. Not all of these will apply to your business and the list is not exhaustive, just representative of different approaches that your software/platform should support.

Topics:

• Sales Growth Rate = (Current Net Sales - Previous Net Sales / Previous Net Sales) X 100
• Operating Cash Flow = Net Income + Non-Cash Expenditures + Change in Working Capital
• Working Capital = Current Assets / Current Liabilities
• Forecast Variance = Difference Between Forecast & Actual
• Sales Day Outstanding = (Average AR / Total Credit Sales) X Total Sales
• Days Payable Outstanding = (Accounts Payable / COGS) X Days in Accounting Period
• Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable
• Accounts Payable Turnover Ratio = Total Purchases on Credit / ((Beginning AP + Closing AP) X 2)
• Current Ratio = Current Assets / Current Liabilities
• Cash Flow from Operations = Net Income + Non-Cash Items + Changes in Working Capital

EPISODE 203: Profit Kritical Performance Indicators
The previous Episode gave you an idea of how well you are managing revenue. Now we look at how well you manage to keep money inside the business - in other words profit.

Topics:

• Reoccurring Revenue Rate (MRR) = Sum of all Reoccurring Payments by month
• Average Revenue Per User (ARPU) = Total Revenue / Number of Subscribers
• Cost of Goods Sold (COGS) = Labor Costs + Materials Cost + Service Costs + Delivery Costs
• Gross Profitability = Total Revenue - COGS
• Customer Contribution = Revenue per Customer - COGS per Customer
• Earnings Before Taxes Interest payments Depreciation and Amortization (EBITDA) = Revenue - EBITDA

EPISODE 204: Investment Kritical Performance Indicators
The concern here is you have made numerous decisions about what customers to pursue, what equipment to buy, how many people to hire, and what new initiatives to pursue; so what happened?

Topics: 

• Return on Equity = (Net Income / Average Shareholders Equity) X 100
• Internal rate of Return = 

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