Josh Aharonoff, CPA

The Financial Statements Mindmap

Learn about the Financial Statements and how they are all connected with this simple infographic

The Financial Statements are a popular topic in Finance & Accounting

Almost everything revolves around them

But how do they work? And how are they connected?

Let’s dive in:


➡️ The Profit & Loss

This statement is all about telling you what your income, and your costs

Your income is summarized by

1️⃣ Revenue → income related to your core business

2️⃣ Other Income → income related to none core activities (like credit card points)

Your expenses are summarized by:

1️⃣ Cost of Goods Sold → Costs that relate to carrying out your product or service

2️⃣ Operating Expenses → Costs that relate to operating your business

3️⃣ Other Expense → Costs that don’t relate to carrying out your income, or operating your business

The bottom line metric in a Profit & loss is your NET INCOME, which takes all income accounts, less all expense accounts

The P&L is a SELFISH financial statement…it pushes it’s data to the other 2 statements, but doesn’t care about any activities from the other 2 statements when presenting it’s information

*Note - it’s common to have journal entries that relate to both the Profit & Loss and the Balance Sheet

➡️ The Balance Sheet

This statement tells you all about the financial position of your company

It is summarized by:

1️⃣ Assets → Amounts of Economic value that business owns, or substantially controls

2️⃣ Liabilities → Amounts that you owe to creditors

3️⃣ Owners Equity → Amounts that you owe to the owners

The Balance sheet is presented on a cumulative basis, which is the only statement of the 3 that acts this way...

and it PULLS from the Income Statement via an account called RETAINED EARNINGS...

which is a cumulative balance of your NET INCOME from your Profit & Loss

➡️ The Statement of Cash Flows

This statement is all about telling you where your cash is going

It is separated by:

1️⃣ Cash from Operating activities → this section relates to cash movements from operating your business

2️⃣ Cash from Investing activities → This section relates to cash movements from fixed & long term assets (IE, Assets that are invested into the business for long term benefit)

3️⃣ Cash from Financing activities → This section relates to cash movements from amounts invested by owners, or creditors - both for amounts put in, and amounts repaid

The Statement of Cash Flows is the NEEDIEST of all 3 statements…in fact, it doesn’t even present you with any new data!

It simply pulls from the other 2 statements, as shown in the mindmap below

That’s my take on the 3 Financial Statements, and how they are all connected

Got anything to add? Let us know in the comments below 👇

PS: If you enjoyed this post, you will LOVE my upcoming FREE 5 day Accounting Email course where we cover the Financial Statements, and many other topics.

Register for free before 6/18 over here: https://bit.ly/45XSAUf

The World of Finance & Accounting 🌎

where numbers align, and profits shine…

I wish I had this poster when I first majored in Finance & Accounting…

There is SO MUCH opportunity in the field.

Let’s dive into each area:

🌎 ACCOUNTING

🗒️ Responsibilities include:

▪️ Producing financial statements, and managing financial operations

👥 Roles:

▪️ Bookkeeper

▪️ AP / AR Clerk

▪️ Payroll specialist

▪️ Procurement specialist

▪️ Controller

🎓 Certifications & licenses:

▪️ Certified Public Accountant (CPA)

▪️ Certified Management Accountant (CMA)

▪️ Enrolled Agent (EA)

▪️ Graduate or Undergraduate Degree in Accounting

🗣️ Common Terms:

▪️ Debits & Credits

▪️ Balance Sheet, Profit & Loss, Statement of Cash Flows

▪️ GAAP

▪️ Accrual

🔧 Common Tools:

▪️ Accounting Software

▪️ Enterprise Resource Planning (ERP)

▪️ Excel, PowerBI & Google Sheets

🌎 FP&A

🗒️ Responsibilities include:

▪️ providing projections, analyzing projections vs actuals, and drilling deep into margins & metrics

👥Roles

▪️ FP&A Analyst

▪️ FP&A Manager

▪️ VP of Finance

🎓 Certifications & Licenses

▪️ Certified Corporate FP&A Professional (FP&A)

▪️ Graduate or Undergraduate Degree in Finance, Business Administration, or Accounting, or Economics

🗣️ Common terms

▪️ Budget vs Actuals
▪️ 3 statement modeling
▪️ Board Reporting

🔧 Common Tools

▪️ Excel & Google Sheets

▪️ Microsoft Powerpoint

▪️ Tableau, PowerBI, Looker

▪️ SQL

🌎CORPORATE FINANCE

🗒️ Responsibilities include:

▪️ Identifying investment opportunities and assisting with various financial objectives

👥 Roles:

▪️ Investment Banker

▪️ Head of Mergers & Acquisitions

▪️ VP of Capital Markets

▪️ Valuations Analyst

🎓 Certifications & Licenses:

▪️ Chartered Financial Analyst (CFA)

▪️ Masters in Business Administration (MBA)

▪️ Undergraduate or Graduate Degree in Finance or Economics

▪️ Series 6

▪️ Series 7

🗣️ Common terms:

▪️ Free Cash Flows

▪️ Internal Rate of Return

▪️ EBITDA

▪️ Stock price

▪️ Market Capitalization

🔧 Common Tools:

▪️ Bloomberg Terminal

▪️ Excel & Google Sheets

▪️ MATLAB

There’s a lot more that I wanted to include, but Linkedin restricts posts to only 3k characters.

Check out the infographic to learn about it all!

Got anything to add?

Let us know in the comments below 👇

PS: Want to level up your career?

You can get content like this delivered right to your inbox everyday.

Join 30k+ Finance & Accounting professionals and subscribe via the link at the top of my profile ↗️

The Universe of Financial Statements 🪐🌑☀️
Take a journey through each galaxy to learn more about business!

🌌 THE PROFIT & LOSS

This galaxy is filled with planets, asteroids, and moons all designed to tell you one thing:

how profitable is your business

It is separated by the following planets:

🌑 Revenue → your income

🌕 Cost of Goods Sold → the cost to deliver your income

🌕 Operating Expenses → the cost to operate your business

🌑 Other Income → income not related to your core business

🌕 Other Expense → expenses not related to your core business

This galaxy brings us to what may be arguably be the most important planet in our galaxy…

🌍 Net Income → your net profitability… taking all income accounts, and subtracting all expense accounts

But the constellations found in the galaxy of your P&L is just one part in the vast universe of Financial Statements…

which brings us to what may be the most important galaxy of them all…

🌌 THE BALANCE SHEET

This galaxy was orchestrated by the heavens to tell you one thing…

What is the net worth of your business?

It is separated by the following planets:

🪐 Assets → items of economic value that the business owns / substantially controls

⚫ Liabilities → amounts owed to creditors (hence it being a black hole!)

🌐 Owners Equity → amounts owed to the owners of the business

Before you put your telescope away 🔭…don’t forget about one very important galaxy

🌌THE STATEMENT OF CASH FLOWS

This galaxy…like the other galaxies…was orchestrated for one purpose…

To explain where your cash is going each period 💰

Some scientists use their telescope to study this galaxy using the DIRECT method…

while many scientists point their telescope to this galaxy using the INDIRECT method

It is separated by the following planets:

🌘 Cash from Operating Activities → cash related to operating your business

🌘 Cash from Investing Activities → cash movements related to long term assets invested by the business

🌘 Cash from Financing Activities → cash movements related to funding the business

As the saying goes…nothing in the universe happens by chance…

and we are all CONNECTED.

The financial statements are no different.

Take a trip through a wormhole in the Profit & Loss, and you’ll find yourself traveling through space & time into the balance sheet...

🚀 Where Net Income will connect you to Retained Earnings

Travel at the speed of light from the cash flows to the distant planets of both the P&L and Balance Sheet…

Follow these routes:

🚀 Net Income, Depreciation, Amortization → Cash from Operating Activities

🚀 ▲ in current assets / liabilities → cash from Operating Activities

🚀 ▲ in long term assets → cash from Investing Activities

🚀 ▲ in debt, or contributed capital → cash from Financing Activities

Congratulations!

You’ve completed your voyage across time and space.

Got anything to add about the amazing universe of Financial Statements?

Join the expedition in the comments below 🧑‍🚀👇

Everything you need to know about EBITDA 👇

A huge thanks to my good friend and fellow creator Chris Reilly for working with me on this guide!

Everyone is talking about EBITDA...

It's rare you'll find a metric as popular...or notorious

There is so much emphasis on this metric, yet it is so often misunderstood

Let's start with:

➡ What is EBITDA?

EBITDA's literal definition is

Earnings

Before

Interest

Taxes

Depreciation

Amortization

➡ How is EBITDA calculated?

Like the name implies..

Take your net income

[+] Interest Expenses

[-] Interest Income

[+] Taxes

[+] Depreciation & Amortization

➡ Why is EBITDA so important?

Well.. a number of reasons...the 4 biggest being:

1️⃣ EBITDA is commonly used to value businesses

2️⃣ EBITDA is commonly referenced on a number of ratios

3️⃣ EBITDA can be a good approximation for free cash flows (though it can also wildly differ)

4️⃣ EBITDA can be a good measure to compare companies across the same industry

➡️ What are some common misconceptions with EBITDA?

1️⃣ EBITDA is not a GAAP metric

That’s right…for that reason, you won’t find it on a profit and loss

2️⃣ EBITDA does not equate to cash flows

Your cash flows can wildly differ from period to another when compared to EBITDA, depending on how things like accounts receivable / payable, and fixed assets come into the mix (to name a few)

3️⃣ EBITDA is not the same as net operating income

While in many cases these 2 items may be the same, for some companies, it can differ

An example can be if a Fixed Asset is necessary in order to carry our revenue, in which case Depreciation would be included in cost of goods sold

➡️ What’s my take on EBITDA?

It’s a powerful metric, and it’s popular for a reason

At the same time, it’s just one metric filled with hundreds that can be used to understand what’s happening with a business, and should not be the only one that you measure

Other metrics to consider are:

1️⃣ Gross Profit - what’s left over after you subtract out your COGS from your Revenue

2️⃣ Free Cash Flows - The cash flows available for distribution to investors or for future investments (operating cash flows - capital expenditures)

3️⃣ Annual Recurring Revenue - the amount of revenue that comes from customers committed to annual contracts that auto renew

And many more

Those are just a few things to note about EBITDA - there is so much more to it

What would you add?

Let us know in the comments below 👇

20 Excel Tricks & Tips 👇

Master all 20 and become an excel wizard 🧙‍♂️

👉 Download the worksheet and high res infographic right here for FREE for the next 48 hours:
🔗 https://lnkd.in/eRbavm5h

1️⃣ Add a dropdown tied to a dynamic list

Know how to create a drop down using data validation?

Cool…now how about extending that reference when your list expands?

Step 1: create a table out of the list. This will extend the table anytime a new row is added

Step 2: create a named range for that column

Step 3: reference the named range in your data validation, and voila 👌

2️⃣ Unpivot data

This may be my favorite…

and is extra useful when creating dashboards.

Step 1: Select your range (with dates going horizontally)

Step 2: Select Data > From table/Range

Step 3: Select all date columns in powerquery, right click, and hit unpivot columns

3️⃣ Add buttons to a pivot table (slicer)

Pivottables are a huge part of excel…and slicers make them come to life.

Think of them as buttons that can instantly filter your pivottable (or table).

👉 Select Table Design > Slicer…or pivottable design > slicer

4️⃣ Text to column

Clean up your data and separate values in a cell into multiple columns.

👉 Select Data > Text to Columns

5️⃣ Transpose data

Take data going this way ↔️

And transform it to go this way ↕️

and vice versa

Step 1: copy your range

Step 2: go to paste special

Step 3: click transpose

alternate: use the =UNIQUE spill function

6️⃣ Duplicate window

Ever work on 2 separate tabs, and found a need to view them both at the same time?

👉 Hit View > New Window

7️⃣ Add a watch window

Wanna take tip 6 to the next level? Add a “watch” on a cell..

and you can track the values everywhere you go

👉 Hit Formulas > Watch Window

8️⃣ Add a Table of Contents

Don’t make the mistake of thinking you’re the only one using your excel file - be prepared for people to review & ask questions.

Give your readers clear visibility into what’s what by adding a table of contents

Step 1: Add a new tab, and type out each tab name & description.

Step 2: Press CTRL + K to insert a link to each tab for easy reference

9️⃣ Create different scenarios via scenario manager

Wanna know what your business will look like under a more aggressive set of assumptions?

No need to create a new workbook…instead, use the scenario manager.

Step 1: Select the cells you’d like to update

Step 2: Select Data > Scenario Manager

Step 3: Choose the new values you’d like for each cell

Step 4: Toggle to different scenarios

===

That’s a preview of some of the 20 tips & tricks using only 3k characters.

The good news is you can grab the full worksheet, walking you through all 20 tips & tricks for free via the link on the bottom of the graphic

What excel tips & tricks would you add?

Let us know by joining in on the discussion in the comments below 👇

24 Startup KPIs 👇

1️⃣ Gross Margin → Gross Profit / Revenue

2️⃣ Cash Burn → Cash consumed, not factoring in financing activities

3️⃣ Churn → Lost revenue / customers who are no longer active

4️⃣ EBITDA Margin → EBITDA / Revenue

5️⃣ Customer Acquisition Cost → Cost to acquire a customer

6️⃣ Customer Lifetime Value → Total expected revenue from a customer over their lifetime

7️⃣ EBITDA → Net Income + Interest + Taxes + Depreciation + Amortization

8️⃣ Monthly Recurring Revenue → Revenue from customers subscribed to monthly recurring plans

9️⃣ Net Dollar Retention → Net revenue / opening MRR

🔟 Annual Recurring Revenue → Revenue from customers subscribed to Annual recurring plans

1️⃣ 1️⃣ CAC Payback → Period of time till you make back your Customer Acquisition Cost

1️⃣ 2️⃣ Sales Attainment → % of quota attained by sales team

1️⃣ 3️⃣ Average Contract Value → Total Revenue / # of Contracts (B2B)

1️⃣ 4️⃣ Expansion Revenue → Added Revenue from recurring customers

1️⃣ 5️⃣ Contraction revenue → Reduced revenue from recurring customers

1️⃣ 6️⃣ Budget Attainment → % of your budget achieved

1️⃣ 7️⃣ Average Revenue per User →Total Revenue / # of Users (B2C)

1️⃣ 8️⃣ Net Promoter Score → Used to measure customer loyalty based off of likelihood to refer

1️⃣ 9️⃣ Runway → How many months till you run out of cash

2️⃣0️⃣ Revenue run rate → This months revenue * 12

2️⃣1️⃣ Gross Profit → Revenue - COGS

2️⃣2️⃣ Cash out date → Date in which you run out of cash

2️⃣3️⃣ Net Income → Revenue - COGS - Operating Expenses + Other Income - Other Expenses

2️⃣4️⃣ Operating Expenses → Company Expenses not related to your Cost of Goods Sold, or Other Expenses

Did I miss any?

Let me know by joining the discussion in the comments below 👇


***
Did you enjoy this content?

👍 Give this post a thumbs up

➕ Follow me for more Finance & Accounting Tips

Looking to level up your career with Finance & Accounting?
These are the people you need to be following 👇

We live in an incredible day and age…

the amount of free resources available is overwhelming.

And it’s never been easier to distribute and consume content.

Whether that be:

→ reading materials

→ videos

→ podcasts & audiobooks

→ live workshops

→ just about any other way in which you can learn something

These creators have taken the time to prepare these resources for all of our benefits.

Posting content is no walk in the park….

it takes hours and hours of preparation…

and often times requires a staff of people to manage.

I’ve been fortunate over the last 2 years to connect with close to all the creators listed on this infographic…

creators that I once saw as competitors to me…

and now I see them as my partners in teaching the world Finance & Accounting

If you’re looking to level up your career, these are the people that you need to be following.

So much of what they are giving away is entirely free…

and for those looking for more, there are a ton of courses, workshops, templates, and other resources available.

As the saying goes…

”He (or she) who seeks the knowledge, shall obtain it”

Join me in the comments below in commending these creators for the tireless effort, and countless effort they put in each day 👏👏

PS: I know that for sure I missed some great people here (these are just the ones that I’ve connected with). Let us know in the comments below who else should be added to this list 👇

How to perform a Month End Close 👇

Month End Close is one of the most common tasks for an accounting function...

and it’s also one of the most important tasks.

Below you’ll find my MEGA GUIDE (80+ pages) on everything I know about how to perform a month end close…

something I’ve developed after closing the books for 100s of companies.

But first…

➡ What Exactly is a Month End Close?

While many may define this differently…

to me, a month end close is the

PREPARATION…

RECONCILIATION…

& SIGN OFF on a company’s financial statements

➡ What are the Steps in a Month End Close?

1️⃣ CLASSIFY ALL TRANSACTIONS TO GL ACCOUNTS

All of your bank & credit card transactions should automatically flow through to your accounting software…

allowing you to easily start classifying to your General Ledger accounts.

When classifying accounts, keep these tips in mind:

⏩ Include a vendor / customer name on all transactions to allow for further reporting & analysis

⏩ Bulk classify transactions for the same vendor that belong to the same category to save time and stay efficient

⏩ Attach receipts & documentation on any large transactions (typically above $1k)

⏩ Put all transactions you are unsure of to uncategorized expense / income, and revisit at the end. Don't let it hold up your month end close!

2️⃣ RECONCILE ALL BANK & CREDIT CARD ACCOUNTS

Now it’s time to reconcile your transactions.

A reconciliation is simply taking the balance from one location (IE, your accounting software)…

and TYING it to another location (IE, a bank statement).

Bank reconciliations are IMO the most important piece of a month end close…

without it, you don't have any credibility on the numbers being presented!

3️⃣ BOOK ADJUSTING JOURNAL ENTRIES

Here comes the real work in a month end close - adjusting journal entries.

Common ones are Prepaid expenses…

Deferred Revenue…

Depreciation....

the list is endless.

The key here is to have rock solid workpapers, typically in excel, helping you both validate & calculate the adjustments / balances

4️⃣ CONFIRM ACCURACY & FINAL REVIEW

Here, it's time to zoom out and review all of your work.

I like to first start by scanning the month over month financials

🤔 Do any accounts show large swings in balances?

🤔 Are there any new accounts that can be merged with existing accounts?

🤔 Do any accounts have missing values?

From there, I'll do a final review on all transactions posted to ensure everything is coded correctly

Once you've completed the steps above - you're all set!

And you can then move onto distributing the financials, performing analysis, etc.

Those are my tips for closing out the month.

What has been your experience?

Join us in the comments below and let us know your thoughts : 👇

PS: This post is an excerpt from my newsletter, where I send out a daily Finance & Accounting tip right to your inbox.

Join 30k+ Finance & Accounting professionals by subscribing via the link at the top of my profile ↗️

The Month end Close calendar 📅
Steps for each day of the month to close your books on time

👍 Give this post a like if you enjoy it (it helps a ton)
⬇️ Download a copy from the link in the graphic below while it's still free

Here’s my schedule:

🗓️ Days 1 - 4 → Classify & Reconcile

✅ Import remaining transactions

✅ Classify remaining transactions

✅ Collect outstanding bills from last month

✅ Send remaining invoices from last month

✅ Download bank statements

✅ Perform bank reconciliations


🗓️ Days 5 - 7 → Book adjustments

✅ Prepare workpapers in excel

✅ Book adjusting journal entries

✅ Match workpapers to trial balance


🗓️ Days 8-10 → Review for accuracy & finalize

✅ Review Balance Sheet

✅ Review P&L

✅ Review AP Ledger

✅ Review AR Ledger

✅ Finalize review for accuracy

✅ Publish Month End Close


🗓️ Days 11 - 15 → Financial Reporting

✅ Review Budget vs Actuals

✅ Review Comparison against prior month

✅ Meet with CEO, and Management

✅ Prepare Board Report


🗓️ Days 16 - 20 → Feedback & Open Items

✅ Respond to any ad hoc requested and open items

✅ Regroup with team on learnings & feedback

✅ Follow up on action items


🗓️ Days 21 - 30 → Prepare for Next Month

✅ Import transactions from Bank & Credit Card

✅ Classify transactions by category, class, and vendor

✅ Upload and process bills from vendors

✅ Import and send invoices to customers

➡️ Some important notes:

1️⃣ Don’t wait till the end to get started

The key here is NOT to wait till the beginning of the month to do the work

It’s doing the workout throughout the month to prepare for the following month’s close

2️⃣ You can close the book even faster

The above schedule shows how you can close the books by the 10th of the month

but the truth is you can close even faster if you are strategic with your resources

3️⃣ You don’t need to work weekends 😇

The calendar below includes weekends, but if you are well staffed, that shouldn’t be needed!

Got anything to add to the calendar?

Let us know by joining in on the discussion in the comments below 👇

PS: If you enjoyed this post, you’ll LOVE my upcoming course on Accounting 101

Let me know your interest over here: https://bit.ly/42mjqlY

6 Excel functions for accountants 👇

I use these functions almost anytime I open a spreadsheet…

and if you know these 6 functions, your productivity will increase dramatically

Let’s go over each function, and how you can use it in your job in Finance & Accounting

1️⃣ SUMIFS

This one is my go to, and is what it sounds like.

It “SUMS” data in a range “IF” it meets a certain level of criteria.

For example…I’ll often times condense a profit & loss into a summarized profit and loss using SUMIFS.

2️⃣ XLOOKUP

Lookup functions may be the most popular functions in excel.

They allow you to pull in an exact value from a range that you “look up”.

And the beauty of Xlookup is it replaces the limitations you have with Vlookup and Hlookup (please, I'm begging you...stop using Vlookup)…

allowing you to look up values in a 2 dimension table, both top to bottom↕️ and ↔️ left to right

I'll often times pull in an exact value from my P&L given a specific period, and account, using XLOOKUP.

3️⃣ COUNTIFS

This one is not nearly used enough…it’s extra useful when you’re comparing 2 datasets

So for example, I’ll be rolling forward a financial model with a new month of actuals.

Before I can import the new values, I need to understand if there are any new account added to my chart of accounts.

That’s where the beauty of COUNTIFS comes in. I can count how many times each value in my new set of financials appear in my financial model….

if the amount is 1 or more, I know i have a match. if 0, I know I have a new account on my hands

4️⃣ IF

This function is really the heart and soul of any sort of programming.

the premise is extremely simple…

IF my condition is TRUE, return this result. Otherwise (ie it’s false), return this other value.

I use this often times in my financial models to give a flag on whether a month is an “Actual” or a “projection” month, by comparing it to another cell where I track the latest month of actuals

5️⃣ EOMONTH

Almost any financial report will show your dates going across this way ↔️

and your accounts going across this way ↕️

You can extend the dates by a month by using =EOMONTH(last period,1)…

or by a quarter using =EOMONTH(last period,3)…

or a year with =EOMONTH(last period,12)

6️⃣ UNIQUE

Duplicates can cause a headache 🤕

and while there are numerous ways to remove duplicates…UNIQUE is actually my favorite.

Why? because it’s so simple.

For example, I may want to run a report showing total revenue per customer.

To populate this report, I first need a unique list of all customers, which I can apply using the unique function

===

These are my 6 most commonly used functions that I use in finance & accounting - but there are a never ending list of more functions out there.

Which one is your favorite? And which would you add?

Join us in the discussion in the comments below 👇

PS: Download this infographic in Hi res, along with the excel worksheet right here:
🔗 https://lnkd.in/egyjthED

How I create Excel dashboards

↓ Check out the comments to get a free copy of this dashboard ↓

1️⃣ Get your data in a table format

The first step is to get my data into a more flexible format so that it’s easier to run formulas

My favorite method for accomplishing this is power query

With power query I can unpivot dates so that they show in 1 column

Anytime my data changes, I can just hit “refresh”, and it’s ready to be used

2️⃣ Shrink down rows & columns size on a new tab

Once I have my data ready to use, I then create the canvas for my dashboard in a new tab

I often times will shrink down the rows & columns of the new tab...

making it’s easier to control the design

3️⃣ Create date selectors

In order to pull in the right data, I set up fields where my start and end dates will go

Then I do the same for comparison dates

I use data validation to create an easy to use dropdown for these dates

These will be some of the most important inputs for my dashboard

4️⃣ I then start outlining my first KPI

I’ll start merging cells where appropriate

and setting the styles of each cell to match my color scheme

5️⃣ I use sumproduct to pull in my values

This is one of the most powerful formulas in excel

and it makes it so easy to get the data you need

My formula will often times look like this

=SUMPRODUCT((Data[Value)*(Data[KPI]=C29)*(Data[Dates]>StartDate)*(Data[Dates]≤EndDate))

Where C29 is the metric I want to showcase

and StartDate and EndDate are the inputs from my date selectors up top

6️⃣ I use custom formatting to showcase “increase ▲” and “decrease ▼”

Custom formatting is one of my favorite tools

Here you can specify the value if your result is positive, negative, or blank

like this

“increase ▲”; “decrease ▼”; 0

Just press CTRL + 1, and go to custom on the bottom to set the formatting

7️⃣ I copy the KPI over to complete the dashboard

If my calcs were set up correctly, I can now reuse this component easily

Then all I need to do is change the KPI name in each box

and it should update with the right values

8️⃣ Finish it up with a nice header & footer

Now comes the finishing touches…

I like to give a nice pretty title & footer to wrap things up

if I’m using powerpoint, I may just skip this part

That’s how I create a dashboard from start to finish

What are your tips for creating a dashboard?

Lets us know in the comments below ⬇️

PS: Check out the comments to get a free copy of this dashboard

***

Hey 👋 - thanks for reading!

I post Finance & Accounting content everyday

➕ Follow me and hit the bell 🔔 icon on my profile to be notified of every post

🚀 Elevate your career and learn to build a 3 statement model (link in my profile)

Vlookup vs Hlookup vs Xlookup
Learn the most popular excel functions, and which one to use when 👇

Lookup functions are REALLY popular in excel…

because they allow you to “lookup” a value from a dataset, based off of criteria that you enter.

Most people only focus on Vlookup, without realizing that there is a far more powerful lookup function available called Xlookup.

Let’s explore these 3 lookup functions and become a pro:

👀 Stick around till the end to grab my excel worksheet to master these 3 functions + the high res infographic 👇

1️⃣ VLOOKUP

💡 How it works → Searches VERTICALLY in the first column of a specified range and returns a value in the same row from a column you specify.

🧮 Syntax → =VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])

✅ Pros →Easy to use for vertical lookups, Supported in all versions of Excel.

❌ Cons → Limited to vertical searches, Searches must start in the first column of the range.

🤔My take → VLOOKUP is probably the most common lookup function, but it’s sooo limited. Learn to ditch this function and focus on XLOOKUP!

2️⃣ HLOOKUP

💡 How it works → Searches HORIZONTALLY in the first row of a specified range and returns a value in the same column from a row you specify.

🧮 Syntax → =HLOOKUP(lookup_value, table_array, row_index_num, [range_lookup])

✅ Pros → Useful for horizontal lookups, Supported in all versions of Excel.

❌ Cons → Limited to horizontal searches, Inefficient with large datasets.

🤔My take → HLOOKUP isn’t as popular as VLOOKUP, but is very similar. As mentioned above…while this may get the job done, there is bigger and better available with XLOOKUP.

3️⃣ XLOOKUP

💡 How it works → Searches for a value in an array or range in EITHER DIRECTION and returns a value from a corresponding array or range.

🧮 Syntax → =XLOOKUP(lookup_value, lookup_array, return_array, [if_not_found]

✅ Pros → Can search in any direction, Allows for return of an array and provides an option for a default value if no match is found, is very efficient.

❌ Cons → Only available in Excel for Office 365, Excel 2019, and later versions, can be complex

🤔My take → XLOOKUP solves all the issues that VLOOKUP and HLOOKUP has, and little by little will be taking over the excel lookup universe.

What makes this even more powerful is when you nest another XLOOKUP inside your XLOOKUP to allow you to find the value with both your X and Y axis.

===

That’s my take on these 3 common lookup functions - which one is your favorite?

Let us know in the comments below 👇

PS: Grab the excel worksheet + high res infographic right here:
🔗 https://lnkd.in/eFre5cn3

The Top 10 VC Metrics 👇

Investors LOVE collecting metrics from startups

Whether that’s part of the due diligence process in a fundraise…
Or each month as part of your board reporting

VCs may not be as demanding on this information if you are at the pre seed / seed level of funding

But once you get to Series A, these metrics will be your best friend…if you can produce them
Or your worst enemy…if you can’t

In this guide, I’ll walk you through each of these metrics, and how to calculate them

Did I miss any? Let me know in the comments below 👇

#finance #startups #accountingandaccountants
_________________
Did you enjoy this content?
Here’s how you can show your appreciation:
👍 Give this post a thumbs up (it makes a huge difference)
➕ Follow me for more Finance & Accounting Tips
🔔 Ring the bell icon on my profile to be notified of future posts like these

Calculate Break Even Point 🎯

The Break Even point is a coveted destination for many companies

It’s where your revenue finally matches your costs, and profitability is on the horizon

For most companies, this can be the goal right from day 1

For startups, this can come much further down the line as they start to prepare for an exit

➡️ What exactly is Break Even?

There are a few ways to define this -

1️⃣ The point where your current months revenue matches your current months expenses

2️⃣ The amount of units you must sell in order to break even

3️⃣ The amount of $$ sales you must generate to break even

4️⃣ The amount of profit you must generated to recoup all cost since inception

Each of these are based on the same question - when do you start to match your expenses with sales?

➡️ How do you calculate break even?

This is most commonly expressed using your Revenue, and comparing it to your Fixed Costs and Variable Costs

➡️ What are Fixed costs?

These are costs that don’t scale with each sale.

If you are operating a restaurant, a fixed cost may be the rent that you pay each month

➡️ What are Variable costs?

These are the opposite of fixed costs…

IE, they change in proportion to the level of business activity

Back to our example of operating a restaurant, a variable cost may be the cost of materials in the food you are selling

➡️ How do you calculate Break Even?

The formula is rather simple

Break Even Point = Fixed Cost / (Sales price - variable cost)

➡️ Can we go over an example?

🥪 Let’s say you sell sandwiches

🏬 Your rent is $10,000 / month

💰 You charge $10 / sandwich

💸 and your variable costs if $6 / sandwich

The formula would be $10,000 / ($10-$6) = 2,500

That means when you sell 2,500 sandwiches…

You make $10,000 in profit…which is exactly what you need to break even on your fixed costs

🤑🤑🤑

That’s my take on break even - what would you add?

Let me know by joining the discussion in the comments below 👇

PS: Grab your copy of this template by clicking on the gif below

https://bit.ly/3NWObKf

10 Balance Sheet Ratios

1️⃣ Debt-to-Equity Ratio

What it means→ Amount of debt a company has in relation to its equity

Formula→ Total Debt / Shareholders' Equity

How to interpret→ The lower the ratio, the less the debt compared to equity

2️⃣ Debt-to-Assets Ratio

What it means→ Amount of debt a company has in relation to its assets

Formula→ Total debt / Total Assets

How to interpret→ The lower the ratio, the less the debt compared to Assets

3️⃣ Equity Multiplier

What it means→ Measures the proportion of a company's assets that are financed through debt versus equity

Formula→ Total Assets / Total Equity

How to interpret→ A high equity multiplier means the company is relying more on debt to finance it’s assets rather than equity

4️⃣ Current Ratio

What it means→ Measures whether a company has enough short-term assets to cover its short-term liabilities

Formula→ Current Assets / Current Liabilities

How to interpret→ The higher the ratio, the more current assets you have in relation to your current liabilities

5️⃣ Quick Ratio

What it means→ Shows the ability of a company to meet its short-term obligations with its most liquid assets

Formula→ (Current Assets – Inventory) / Current Liabilities

How to interpret→ The higher the ratio, the more liquidity your business has

6️⃣ Cash Ratio 

What it means→ Amount of cash and cash equivalents a company has in relation to its current liabilities

Formula→ Cash and Cash Equivalents / Current Liabilities

How to interpret→ The higher the ratio, the more cash you have in comparison to your current liabilities

7️⃣ Net Working Capital Ratio

What it means→ Showcases the difference between a company's current assets and its current liabilities

Formula→ (Current Assets – Current Liabilities) / Total Assets

How to interpret→ The higher the ratio, the more current assets you have compared to your current liabilities

8️⃣ Total Debt-to-Capitalization Ratio

What it means→ The total amount of debt in relation to a company's total capitalization

Formula→ Total Debt / (Total Debt + Shareholders' Equity)

How to interpret→ The lower ratio, the less your business is capitalized using debt

9️⃣ Return on Equity (ROE)

What it means→ Amount of net income a company generates in relation to its equity

Formula→ Net Income / Shareholders Equity

How to interpret→ The higher your ROE, the better return you are getting on your equity

🔟Return on Assets (ROA)

What it means→ Amount of net income a company generates in relation to its total assets

Formula→ Net Income / Total Assets

How to interpret→ The higher your ROA, the better your return on your assets

Those are 10 examples - but there are more!

What would you add?

Let us know in the comments below 👇

***

Hey 👋 thanks for reading!

I post Finance & Accounting content everyday

➕ Follow me and hit the bell 🔔 icon on my profile to be notified of every post

🚀 Elevate your career and learn to build a 3 statement model (link in my profile)

The Universe of Financial Statements 🪐🌑☀️\nVisit each galaxy to learn more about business!\n\n🌌 THE PROFIT & LOSS\n\nThis galaxy is filled with planets, asteroids, and moons all designed to tell you 1 thing: \n\nhow PROFITABLE is your business\n\nIt is separated by the following planets:\n\n🌑 Revenue → your income\n\n🌕 Cost of Goods Sold → the cost to deliver your income\n\n🌕 Operating Expenses → the cost to operate your business\n\n🌑 Other Income → income not related to your core business\n\n🌕 Other Expense → expenses not related to your core business\n\nThis galaxy brings us to what may be arguably be the most important planet in our galaxy…\n\n🌍 Net Income → your net profitability… taking all income accounts, and subtracting all expense accounts\n\nBut the constellations found in the galaxy of your P&L is just one part in the vast universe of Financial Statements…\n\nwhich brings us to what may be the most important galaxy of them all…\n\n🌌 THE BALANCE SHEET \n\nThis galaxy was orchestrated by the heavens to tell you one thing…\n\nWhat is the net worth of your business?\n\nIt is separated by the following planets:\n\n🪐 Assets → items of economic value that the business owns / substantially controls\n\n⚫ Liabilities → amounts owed to creditors (hence it being a black hole!)\n\n🌐 Owners Equity → amounts owed to the owners of the business\n\nBefore you put your telescope away 🔭…don’t forget about one very important galaxy\n\n🌌THE STATEMENT OF CASH FLOWS \n\nThis galaxy…like the other galaxies…was orchestrated for one purpose…\n\nTo explain where your cash is going each period 💰\n\nSome scientists use their telescope to study this galaxy using the DIRECT method…\n\nwhile many scientists point their telescope to this galaxy using the INDIRECT method\n\nIt is separated by the following planets:\n\n🌘 Cash from Operating Activities → cash related to operating your business\n\n🌘 Cash from Investing Activities → cash movements related to long term assets invested by the business\n\n🌘 Cash from Financing Activities → cash movements related to funding the business\n\nAs the saying goes…nothing in the universe happens by chance…\n\nand we are all CONNECTED.\n\nThe financial statements are no different.\n\nTake a trip through a wormhole in the Profit & Loss, and you’ll find yourself traveling through space & time into the balance sheet...\n\n🚀 Where Net Income will connect you to Retained Earnings\n\nTravel at the speed of light from the cash flows to the distant planets of both the P&L and Balance Sheet…\n\nFollow these routes:\n\n🚀 Net Income, Depreciation, Amortization → Cash from Operating Activities\n\n🚀 ▲ in current assets / liabilities → cash from operating activities\n\n🚀 ▲ in long term assets → cash from investing activities\n\n🚀 ▲ in debt, or contributed capital → cash from Finance Activities \n\n===\n\nCongratulations!\n\nYou’ve completed your voyage across time and space.\n\nGot anything to add about the amazing universe of Financial Statements?\n\nJoin the expedition in the comments below 🧑‍🚀👇

The Superhero Financial Reports 🦸🦹‍♀️
each one plays a crucial role in your financial reporting

1. Chart of Accounts
   
  These are the names of the accounts that show up on your financial statements
   
  The key here is to ensure you are using accounts that give the readers of the financial statements clarity into what’s happening….without overdoing it
   
2. Bank Register
   
  These are the transactions as synced / imported from your bank or credit card
   
  This is the first part of a month end close, and involves you classifying each transaction accordingly
   
3. Bank Reconciliation Report
   
  This showcases the balances in your bank & credit card accounts on your balance sheet compared to the balances from your financial institution
   
  Bank Reconciliations are a must with a month end close  
   
  without them, you can’t trust anything
   
4. General Ledger
   
  These are the transactions that make up your financial statements
   
  Think of it like a transaction detail, showing you how each value on your FS were compiled
   
5. Trial Balance
   
  This showcases the net debit & credit balance on each account on your financial statements
   
  It’s in essence the same thing as your financial statements, though:
   
  → You’ll see all accounts from your P&L and BS stacked on top of each other
   
  → You’ll see the net Debit and net Credit balance on each account
   
6. AP Aging
   
  This shows you the amounts you owe to vendors 
   
  it can be both on the summarized & detailed level
   
7. AR Aging
   
  This show you the amounts owed to you by customers 
   
  Like the AP Aging, it can be both on the summarized & detailed level
   
8. Income Statement
   
  This tells you about your income, expenses, and profitability
   
  It’s one of 3 of the what’s commonly knows as the “Financial Statements”
   
9. Balance Sheet
   
  This shows you a snapshot of the business showcasing the net worth at as specific point in time
   
  It’s separated by Assets, Liabilities, and Owners Equity
   
  This is the 2nd Financial Statement
   
10. Cash Flows
   
  This showcases the movements in your cash
   
  It can be prepared on both the DIRECT and INDIRECT method
   
  It is separated by Cash from Operating Activities, Cash from Investing Activities, and Cash from Finance Activities
   
  This is the 3rd Financial Statement
   
11. Statement of Changes in Equity
   
  This shows the details behind how the owners’ equity has changed over a specific period
   
12. Notes to the Financial Statements
   
  This showcases the additional information & disclosures about the financial performance of a company
  

Did you enjoy this? Then you’ll love my upcoming FREE webinar THIS FRIDAY @11am EST where we’ll talk about each of them in depth

Join us over here: https://bit.ly/468MPDc

10 Common Journal Entries (with debits & credits) 👇

Adjusting Journal entries are the heart and soul of a month end close process.

They help you adjust the balances on your general ledger, and are extra relevant under accrual accounting (though cash accounting also has adjusting journal entries).

Here are the 10 most common that I've seen

1️⃣ Deferred Revenue

When payment is received

DR Cash
 CR Deferred Revenue

When revenue is earned

DR Deferred Revenue
 CR Revenue

2️⃣ Prepaid Expense

When you purchase something

DR Prepaid Expense
 CR Cash

When you incur an expense

DR expense (ex: office supplies)

 CR Prepaid Expense

3️⃣ Depreciation

DR Depreciation expense

 CR Accumulated Depreciation



4️⃣ Accrued Expense

DR expense (ex: office supplies)

 CR accrued expenses

5️⃣ Inventory

when inventory is purchased

DR Inventory (or raw materials / WIP / finished goods)
 CR cash

When goods are sold

DR COGS

 CR Inventory (or related acct)

6️⃣ Accrued Interest

DR Interest Expense
 CR Accrued Interest

7️⃣ Security Deposit

DR Security Deposit
 CR Cash

8️⃣ Intercompany balances

If money is sent to affiliate co
DR Due to/from affiliate co
 CR Cash

flip the order if cash is received

9️⃣ Accrued Payroll

When cash is paid..

DR Accrued Payroll
 CR Cash

When reconciling payroll…

DR Payroll expense
 CR Accrued Payroll

🔟 Amortization

DR Amortization expense
 CR Accumulated Amortization

===

Way to go - now you can close the books! 👏

Did I miss any?

Let me know by joining in the in the comments below 👇

Learn how to build a Financial Dashboard in under 4 minutes 🤯 🤩

One of my favorite things to do in excel is to prepare a dashboard that is both APPEALING…as well as DYNAMIC.

By appealing….I mean one that you can just stare at and feel happy 😃

By dynamic…I mean one that you can easily edit & manipulate, without worrying about your formulas & references gets misaligned.

See….when you work in Finance & Accounting, your job goes WAY beyond just crunching numbers

HOW you present your data is just as important

Your audience will thank you when the data is presented in a way that's easy to understand, and visually appealing

In this video, I walk you through how to create a dynamic financial dashboard in just a matter of minutes

Here are a few key details to keep in mind:

✅ Organize your data in a way that's easy for a machine to understand

That means in a table, so that your formulas are much more flexible than if they were in an unstructured format

✅ Outline your dashboard over many rows & columns, and shrink each cell.

This can be helpful so that it will be easy to merge cells and maintain full control over your design

✅ Define variables (named ranges)

When you create named ranges, your formulas are easier to understand…

and you can craft them much more quickly than if they referred to a specific range.

I like to assign named ranged to my dates (start date, end date, comparison start date, comparison end date)….

as well as the fields I’ll be using

If you have multiple dashboards in your excel file, you can use a named range specifically for the scope of each tab instead of the entire workbook

✅ Create a table to show the aggregation method for each KPI.

Your dashboard should aggregate information - but how your info gets aggregated, depends on the type of metric.

For example, your ending cash should be calculated as of the end date that you select…

your total revenue, on the other hand, should be calculated as the sum of values between your start and end date

✅ Design your dashboard in a way that's simple to take a screenshot and include in a pitch deck, or presentation

I love the simplicity of just taking a snapshot directly from excel, and pasting it in my powerpoint presentation…

and it’s actually really simple to do

Simply highlight your range, Press CTRL + C to copy…

then hit ALT + H + V + U to paste as picture.

Those are my suggestions for building a financial dashboard - what are yours?

Let us know by joining in the discussion in the comments below 👇

PS: Skip this tutorial and download the excel template via the link in the comments 👇

PPS: This tutorial may be fast for some - I go through things much more more detail, and much more slowly in my CFO Dashboards course. Check the comments for the link to that too

My top 10 Finance & Accounting Infographics 👇

I've aggregated these top 10 infographics so that you don't have to

1️⃣ Accounting vs FP&A

Learn about the difference between what an Accounting function does, and what an FP&A function does

2️⃣ P&L vs Cash Flows

Learn the difference between a Profit and Loss, and a Statement of Cash Flows

3️⃣ Budget vs Actuals

Learn importance of preparing a budget vs actuals, and some important considerations when preparing one

4️⃣ 10 Common Adjusting Journal Entries

Learn about 10 common adjusting journal entries that are performed during a month end close, and what they mean

5️⃣ 4 Accounting Fundamentals

Learn the 4 fundamentals to accounting:

➡ The Financial Statements
➡ The Accounting Equation,
➡ Debits & Credits
➡ Cash vs Accrual


6️⃣ The Financial Statements

Learn about the 3 financial statements:

➡ The Profit and Loss
➡ The Balance Sheet
➡ The Statement of Cash Flows

7️⃣ EBITDA

Learn what EBITDA means, how to compile it, why it's so popular, and some common misconceptions


8️⃣ EBITDA vs Cash Flows

Understand the difference between EBITDA and Cash Flows (no, they are not the same)


9️⃣ Gross Profit vs Net Income vs EBITDA vs Cash Flows

Understand the difference between these 4 important metrics, and why they are important to use

🔟 Debits & Credits

Learn the fundamentals of how Debits & Credits work...the foundation to Double Entry accounting

Did any of these infographics resonate with you?

Let me know in the comments below 👇

#yourcfoguy #finance #startups #accountingandaccountants
Did you enjoy this content?
Here’s how you can show your appreciation:
👍 Give this post a thumbs up
💬 Leave me a comment below - I respond to each (thoughtful) one
➕ Follow me for more Finance & Accounting Tips
🔔 Ring the bell icon on my profile to be notified of future posts like these