Helping Businesses Thrive with Fiscal Analytics

Transcription

1 1 Helping Businesses Thrive with Fiscal Analytics

2 Fiscal Advantage, LLC Roger Jacobi, CEO Dan O Connell, VP & Founder

3 Agenda Phase 1: Assessment Company Breakeven Points Key Financial Statement Account Review Industry Comparables Sales Analysis Profitability & Working Capital Phase 2: Business Valuation Phase 3: Forecasting Income Statement Balance Sheet & Cash Flow Business Value Benchmarking implementing change 3

4 4 Poll Question #1 Please describe your organization?

5 5 Fiscal Analytics

6 6 Fiscal Analytics

7 7 Fiscal Analytics

8 8 Fiscal Analytics

9 9 Fiscal Analytics

10 10 Fiscal Analytics

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13 13 Actionable Data Financial Statements Fiscal Analytics 13

14 14 Fiscal Analytics Insightful data developed to understand the components of profit, cash flow & business value. Data which allows the company to make the best decisions to improve performance. Fiscal Analytics provides a financial roadmap for companies that want to THRIVE.

15 15 Fiscal Analytics 1 Review financial performance 2 Identify opportunities & dollars 3 Forecast & implement to thrive

16 16 Income Statement Review Cost of Goods Sold - Cost Controls COGS at 2013 level would add $159,165 to profits COGS at Industry Avg of 63.6% would add $525,444 to profits

17 17 Income Statement Review Op Expenses - Cost Controls Congratulations! * Better than Industry * Best in Recent History

18 18 Breakeven Point

19 19 Breakeven Point Historical Days to Breakeven have been increasing.

20 20 Income Statement ($ in 000) 2013 $ 2014 $ 2015 $ Sales $ 4,247 $ 4,905 $ 5,721 COGS ($2,973) 70.0% ($3,455) 70.4% ($4,164) 72.8% Op Exp* ($1,224) 27.5% ($1,318) 25.8% ($1,436) 24.1% Op Income $ 50 $ 132 $ 121 Non Op Exp ($ 5) ($ $ $ 45 Profit* 1.1% 0) $ % 7 $ %

21 21 Breakeven Point Attainable Days to Breakeven estimated at 263 Days.

22 22 Breakeven Point Breakeven variance is consistent.

23 23 Breakeven Point Historical profits, excluding Owners Excess Compensation are shown for the past 3 years.

24 24 Breakeven Point Based on best Operating Expense of 24.14% (2015) and best COGS of 70% (2013)

25 25 Breakeven Point Difference is the unclaimed profit. The excess cost built into the cost structure.

26 26 Breakeven Point Difference is the unclaimed profit. The excess cost built into the cost structure. Unclaimed profit variance high

27 27 Industry Comparables What benchmarks should we use? Company s historic best already achieved Industry comparables industry averages» Industry sources online» Fiscal Checkup uses RMA» NAICS (North American Industry Code System)» A blended NAICS matches the company.

28 28 Poll Question #2 On average, how many NAICS codes does it take to accurately describe a business?

29 29 Income Statement: Revenue How profitable are our new sales? Separate the Operating Loss into portion due to ratio changes and the portion due to sales changes

30 30 Income Statement: Revenue How profitable are our new sales?

31 31 Income Statement: Growth How profitable are our new sales?

32 32 Income Statement Review Payroll to Sales Very Positive Trend should go down with Sales increases

33 33 Income Statement Review Sales per Employee Shows improved productivity

34 34 Income Statement Review Profit per Employee Positive Trend, but slip last year is concerning

35 35 Income Statement Review Capital Expenditures Not keeping up with significant Sales increases

36 36 Income Statement Review Assets to Sales & Asset Turnover

37 37 Income Statement Review Income Statement Report Card Cost of Goods Sold Operating Expenses Sales Margin Review Real Growth Rate Payroll to Sales Sales per Employee Profit per Employee Capital Expenditures

38 38 Balance Sheet Review Accounts Receivable AR Days 26% better than peers, adding $181,462 in cash flow.

39 39 Balance Sheet Review Accounts Receivable AR Days 26% better than peers, adding $181,462 in cash flow.

40 40 Balance Sheet Review Inventory Inventory Days 29% worse than peers, consuming $269,636 in cash flow.

41 41 Balance Sheet Review Inventory Inventory Days 29% worse than peers, consuming $269,636 in cash flow.

42 42 Balance Sheet Review Accounts Payable AP Days more than double peers, adding $211,162 cash

43 43 Balance Sheet Review Accounts Payable AP Days more than double peers, adding $211,162 cash

44 44 Balance Sheet Review Cash Management

45 45 Balance Sheet Review How much working capital is needed to fund sales growth?

46 46 Balance Sheet Review Balance Sheet Report Card Accounts Receivable Inventory Accounts Payable Overall Working Capital Management

47 47 Poll Question #3 Which area do you think has the greatest need for improvement for most businesses?

48 48 Phase 2: Business Valuation Provides a clear measurement of what a business has done right/wrong in the past The ultimate report card Provides a basis to evaluate future improvements

49 49 Business Valuation - Adjustments Adjustments to Income Statement & Balance Sheet Excess Working Capital a positive adjustment to the valuation.

50 50 Business Valuation Methods

51 51 Business Valuation - Weighted FMV

52 52 Phase 3: Forecasting What does the future look like if the current trends continue? What is the value of making improvements? How do we implement change?

53 53 Forecasting: Current Trends

54 54 Forecasting: Current Trends

55 55 Changing the Forecast What does the future look like if we improve the three identified areas for improvement? Opportunity to Reduce COGS by $525,444 Opportunity to Reduce Inventory Investment by $269,636 Capital Expenditures underfunded

56 56 Changing the Forecast Account Current Industry Goal Cost of Goods Sold 72.8% 63.6% 67.6% days 83 days 96.6 days 1.3% n/a 1.8% Inventory Capital Expenditures

57 57 Changing Projections

58 58 Annual Cash Flow Plan Change in Assumptions:

59 59 Annual Cash Flow Plan INCOME FORECAST Historical Based Override 2018

60 60 Annual Cash Flow Plan INCOME FORECAST

61 61 Annual Cash Flow Plan BALANCE SHEET FORECAST Historical Based Override 2018

62 62 Annual Cash Flow Plan BALANCE SHEET FORECAST

63 63 Annual Cash Flow Plan LOAN COVERAGE FORECAST Historical Based Override 2018

64 64 Annual Cash Flow Plan LOAN COVERAGE FORECAST

65 65 Annual Cash Flow Plan BUSINESS VALUATION Historical Based Override 2018

66 66 Annual Cash Flow Plan BUSINESS VALUATION

67 67 Benchmarking, A Process Benchmarking What is it? Compares company results to standards Measures the gaps that exist Develop a plan to close the gaps Continued benchmarking to remain efficient Benchmarking What are the standards? Compares company results to industry Compares company to their best performance

68 68 Six-Step Benchmarking Process Gather Needed Data Benchmark & Measure Gaps Communicate With Buy-in Devise Plan & Gather Implement Monitor Results Recalibrate Data

69 69 Six-Step Benchmarking Process Gather Needed Data Benchmark & Measure Gaps Communicate With Buy-in Devise Plan & Gather Implement Monitor Results Recalibrate Data On-going process

70 70 Six-Step Benchmarking Process Gather Needed Data Benchmark & Measure Gaps Communicate With Buy-in Devise Plan & Gather Implement Monitor Results Recalibrate Data On-going process

71 71 Poll Question #4 What role does benchmarking play in your business or the businesses you advise?

72 72 Other Tools To Serve Your Business Clients? Survey Says 55% Top priorities are financial 49% Need help to accomplish priorities 44% Accounting Firm is having low or no impact 12% Plan to seek a new accounting firm Source: What SMBs Want, Sleeter 2015

73 73 Fiscal Checkup Assist companies that want to optimize financial performance Empower Business Advisors who want to be a catalyst for that change Provide a proven process to identify key financial parameters that have greatest potential impact

74 74 Business Performance Review Accounts Receivable Cost of Goods Sold Accounts Payable Operating Expenses Inventory Capital Expenditures Growth Rates Margin Analysis Revenue per Employee Payroll as % of Sales Working Capital Mgmt Break Even Analysis Inventory to Sales 54 Financial Ratios Net Fixed Assets to Sales Payables to COGS Margin on New Sales Profit per Employee Operating Expenses per Employee

75 75 Business Performance Review Discounted Cash Flow Capitalization of Earnings Multiple of EBITDA Multiple of Book Value Multiple of Earnings and a blended value that is validated

76 76 Business Performance Review Changeable Variables: 1. Sales Growth Rate 2. COGS as % of Sales 3. Operating Expenses as % of Sales 4. AR Days 5. AP Days 6. Inventory Days 7. Capital Expenditures as % of Sales

77 77 Business Performance Review

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79 79 Affordable: $495 list price Discounts & subscriptions available for Advisors Grow Advisory Service Revenue Improve Client Retention Secure New Business Clients

80 Two Free Reports 80 Fiscal Report Card 5 minutes AR, AP, Inventory Revenue, COGS, Operating Expenses and Profit Up to 5 NAICS Codes

81 Two Free Reports 81 Industry Comparable Report Up to 5 NAICS Codes

82 82 Poll Question #5 What will be your takeaways from this webinar?

83 83 Thank you.

84 84 Poll Question #6 Further info from Fiscal Checkup?