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Financial Intelligence For Entrepreneurs - Coggle Diagram

- - - - What is Financial Intelligence?
        
        A set of Skills that can be learned. It is broken into 3 distict skills sets. What are the skill sets?
        
        Income Statement, Balance Sheet and Cashflow Statement
      - What is the Foundation?
        
        A: it is a Financial Report is the Foundation block of FI.
      - What is an Income Statement?
        
        A: The Income Statement Shows Revenues, Expenses, and Profit for a period of time such as month, 1/4 , 1yr. Also called P/L Profit and Loss Statement Bottom Line it is just the NET INCOME
      - What is a Balance Sheet?
        
        A: A balance sheet is liabilities , assets , owner equity at a point in time. Basically how much a company is worth at a point in time.
      - What is Cash (and Cash Flow Statement?
        
        A: Cash = Money , stocks or bonds that can quickly be turned into cash. Cash flow = Cash coming in and cash coming out and the difference.
      - What are the roadblocks to Financial Intelligence?
      - What is the "Art of finance"
        
        A: Accountants have Finance people need to make educated guesses based on the information provided
      - What is are profitability ratios?
        
        A: THey are derived from the income statement and need to be high to maximize profit.
      - What are efficiency rations?
        
        A: They tell you how well you are managing you assets in a company. If you understand these you can increase profit and cash flow without increasing sales or costs.
  - - - A: Are the costs of keeping the business going day to day. Include Salaries, benefits, and insurance costs among a host of others. Operating expenses apear on the income statement.
        
        Operating Expenses are taking off the profit immediately.
    - - Capital Expenditures spreads the cost over several accounting periods.
        
        A: A purchase of an item that is considered a long term investment. Capital Expenditures show up on the Balance sheet not the income statement. !IMPORTANT: Only the depreciation of a piece of capital equipment appears on the income statement.
    - - A: Allows accountants to spread cost of equipment and other assets over more than one accounting period. One exception is Land does not depreciate. The total depreciation is the estimated life of the equipment or asset.
    - - A1 Public: Publicly traded companies are valued everyday by the stock price. Stock price times number of shares outstanding = Market Capitalization / Market Cap
      - A2 Private: Price-to-earnings ration = earnings / profit and then see the stock market values similar public business in relation to there earnings.
      - A3 Private: Discounted Cash Flow Method = how much cash your business generates each year and figure that a buyer buys a stream of cash. Use some interest rate to determine what the stream of future cash is worth today.
      - A4 Private: Asset Valuation add up the companies assets. Add real estate equipment, inventory and so on with intangibles such as reputation and customer list.
  - - - A: To overseas the management and strategy of the organization from a financial perspective. In Start Ups they line up financing, negotiating and structuring loans, managing cash flow and making decisions about the companies capital structure. Responsible for the financial reports.
    - - Dealing with the outside world. Public: Communicating with investors and negotiating with the bankers.
- - - - A: Profit shows up on the income statement and can be changed many factors not just sales. Some of these factors are more art that science.
    - - A: difference between accrual
    - - A: Match the costs with the associated sale to determine profits in a given period of time. This is to prepare the income statement.
    - - Show the profit of the company per month, quarter or year
    - - A: It is is accounting usually done with start ups and you just subtract expenses from gross revenue to get profit.
    - - an income statement measures sales or revenues, costs or expenses, and profit or income.
        
        Starts with a Sale. (the sale is recorded but may take for example 30 days to receive the money)
        
        Costs and Expenses in any given period may not be the ones they wrote checks for during that period. They are the costs and expenses on the income statement that incurred in generating the sale recorded during the time period.