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We're continuing our course "Make Strategic Business Decisions Using Cost-Volume-Profit (CVP) Analysis" on YouTube. In this lesson, you'll dive into the three main cost classifications: Variable, Fixed, and Mixed Costs. Understanding these is essential for effective financial analysis and strategic decision-making in any business setting. Stay tuned as we keep adding more lessons to our YouTube channel. 👉 Enhance your expertise today and don’t forget to subscribe to our channel for more insightful updates: https://bit.ly/3A7Uq9o

Top 12 Accounting Ratios Become a financial analysis pro today! 👇 1. Liquidity Ratios - Quick ratio: Assess 90-day liquidity: (Current Assets - Inventories) / Current Liabilities - Current ratio: Assess 12-month liquidity: Current Assets / Current Liabilities - Cashflow coverage ratio: Measures the ability to pay off obligations with operating cash flows: Operating Cash Flows / Total Debt 2. Profitability Ratios - Return on investment (ROI): Measure investment effectiveness: (Gain from Investment / Cost of Investment) x 100 - Return on equity (ROE): Assess shareholder value creation: Net Income / Shareholder's Equity - Gross margin: Measure financial efficiency: (Revenue - COGS) / Revenue 3. Debt Ratios - Debt ratio: Analyze debt proportion: Total Debt / Total Assets - Debt to equity ratio: Evaluate financial leverage: Total Debt / Total Equity 4. Efficiency Ratios - Inventory turnover: Analyze inventory sales rate: Cost of Goods Sold / Average Inventory - Asset turnover: Measure revenue generation: Net Sales / Average Total Assets 5. Valuation Ratios - Price/earning ratio (PE ratio): Understand stock valuation: Stock Price / Earnings per Share (EPS) - Dividend yield: Calculate shareholder return: Dividends per Share / Stock Price What other ratios would you add to this list? —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate 🚀 CPE Flow dot com - Are you a certified accountant? - Earn your annual CPE credits (link in bio) ➕ Follow me for accounting & finance insights

How To Ask Your Boss To Sponsor Your CMA Certification👇 Employers understand the value of the CMA Many are willing to sponsor it But the key is to approach them well-prepared Here’s your 10-step checklist: 1. Research & Document the Benefits: Highlight how the CMA will make you a bigger asset. Show stats on how CMAs have improved efficiency, financial strategy, and growth in similar organizations. Check IMA’s annual salary survey for more info. 2. Present a Clear Budget: Outline the total cost – exam fees, prep materials, courses, and potential retest fees. A well-laid-out budget shows initiative. 3. Draft a Training & Study Schedule: Show your dedication. When will you study? How will you manage work and prep without conflicts? 4. Immediate Application of Knowledge: Emphasize that while the certification is a long-term investment, the skills and knowledge you acquire during the prep phase can be immediately applied to your current role, bringing about instantaneous improvements and efficiency. 5. Offer to "Pay Back" Through Commitment: Consider proposing a tenure commitment post-certification, assuring them of a return on investment through your enhanced skills. 6. Discuss Potential Tax Deductions: Some educational expenses can be tax-deductible for businesses. Check local regulations and remind your employer about this. 7. Be Ready to Address Concerns: What if you don't pass? Have a plan. Consider offering to cover retesting fees or suggesting a repayment plan if the certification isn't achieved within a timeframe. 8. Stay Open to Partial Sponsorship: Full sponsorship is ideal, but partial support can also significantly ease your financial burden. 9. Professional Development Plan: Show them the bigger picture. How does the CMA fit into your 5-year career plan within the company? 10. Schedule a Formal Meeting: Don’t spring this during a coffee break. Schedule a time, be ready with your materials, and make it official. —--------------- The key is to show a high ROI Not just for yourself, but for the organization too! By doing so, they’re more likely to back you up 🤝 —------------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate 🚀 CPE Flow dot com - Are you a certified accountant? - Earn your annual CPE credits (link in bio) ➕ Follow me for accounting & finance insights

Top 7 Profitability KPIs The Real Scorecard of Biz Success! Ever wondered how successful a biz truly is Beyond just the top-line sales figures? Enter: Profitability Ratios These ratios reveal a biz operational efficiency Let’s break them down: 1️⃣ Gross Profit (GP) Margin Percentage: It tells us how efficient production processes are. A 70% GP margin means 70 cents of every dollar in sales is GP. Formula: (Gross Profit / Sales) × 100 Example: A company with $500,000 in sales and a gross profit of $350,000: (350,000 / 500,000) × 100 = 70% 2️⃣ Operating Profit Margin Percentage: It tells us how well a company is managing its operating expenses. Formula: (Operating Profit / Sales) × 100 Example: Same company has an operating profit of $200,000: (200,000 / 500,000) × 100 = 40% 3️⃣ Net Profit Margin Percentage: It tells us the bottom line! How much of every sales dollar is pure profit. Formula: (Net Profit / Sales) × 100 Example: With a net profit of $150,000: (150,000 / 500,000) × 100 = 30% 4️⃣ EBIT (Earnings Before Interest & Taxes): Gauges operational profitability, excluding the effects of financial decisions and tax environments. Formula: Net Income + Interest + Taxes Example: If our company's net income is $130,000, interest $10,000, and taxes $10,000, then EBIT = $150,000. 5️⃣ EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization): Zeroes in on operational cash flow, removing the impacts of financing decisions, tax environments, and accounting treatments of tangible and intangible assets. Formula: EBIT + Depreciation + Amortization Example: Add $20,000 in depreciation to our EBIT: $150,000 + $20,000 = $170,000. 6️⃣ ROA (Return on Assets): It tells us the efficiency of asset usage. A 15% ROA means every dollar of assets generates 15 cents of net income. Formula: Net Income / Average Total Assets Example: With total assets averaging at $1,000,000: $150,000 / $1,000,000 = 0.15 or 15% 7️⃣ ROE (Return on Equity): It tells us how well a company is reinvesting earnings to generate additional earnings. Formula: Net Income / Average Shareholder's Equity Example: Shareholder’s equity averages $500,000: $150,000 / $500,000 = 0.30 or 30% —--------------- These ratios are crucial for finance professionals They offer an insightful peek into biz performance 👉 Want to know more? Supercharge your career with the CMA credential 🌟 82,000+ accountants got my free CMA exam cheat sheet. Get yours too! (link in bio) —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate ➕ Follow me for accounting & finance insights

4 Bond Characteristics Finance Pros Must Know 👇 By far, the most common debt securities Relevant to corporate finance pros Are corporate bonds 💵 Let's deep-dive into its 4 characteristics: 1️⃣ Coupon Rate: This is the heart rate of a bond - the fixed percentage of its face value paid out periodically. Think of it as the ‘interest rate’ that a bondholder receives as a reward for their investment. 2️⃣ Maturity Date: The life expectancy of a bond. This is the predetermined date when the bond’s life ends, and the borrower returns the principal amount to the bondholder. 3️⃣ Par Value: Also known as the face value, this is the bond's worth when it matures. Typically, this is the amount the issuer agrees to repay the bondholder upon maturity. Bonds will trade at or at a discount or premium to par value. 4️⃣ Yield: The real ROI for bondholders. Yield is the coupon rate divided by the current bond price. —--------------- 👉 Want to know more? Elevate your career with the CMA credential! 🌟 82,000+ accountants got my free CMA exam cheat sheet. Get yours too! (link in bio) —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate ➕ Follow me for accounting & finance insights

🌟 We're launching our course "Make Strategic Business Decisions Using Cost-Volume-Profit (CVP) Analysis" for free on Youtube. In this lesson, you'll discover the key features of CVP analysis and see the powerful impact it can have on a business’s profitability. More video lessons from this course will be uploaded to our Youtube channel, each packed with insights to help you steer your company's financial future using CVP analysis. 👉 Upskill today and don’t forget to subscribe to our channel for more updates: https://bit.ly/3M135gV

Six Balance Sheet Limitations Increase your financial acumen 👇 The Balance Sheet is a crucial financial statement But it's not the be-all and end-all Six reasons why, including examples: 1. Snapshot in Time: The balance sheet is a snapshot of a company’s financial position at a single point in time. It doesn't capture the nuances of cash flow throughout the year. Example: Your balance sheet might show ample cash on hand, but what if a major vendor payment is due tomorrow? 2. Book Value ≠ Market Value: Assets and liabilities, including company equity, are often listed at their book values, which may not reflect their market value. Example: A company's shares might be trading at $50 on the stock market, while their book value per share according to the balance sheet is only $30. 3. Intangible Assets Missing: Things like brand recognition, human capital, or company culture, which are crucial to success, don't get a line on the balance sheet. Example: A strong brand or skilled workforce isn't represented. 4. Historical Costs: Historical costs can distort true asset value, potentially misleading stakeholders. Example: A piece of land purchased 20 years ago will be recorded at its cost price, not its current appreciated value. 5. Estimations and Judgments: Accounting often involves judgments and estimates, which could change over time, affecting asset and liability valuations. Example: The useful life of an asset is often an educated guess. 6. Lack of Risk Insight: The balance sheet doesn’t differentiate between 'good' and 'bad' liabilities or provide risk context. Example: Two companies may have similar debt levels, but different risk exposures. —--------------- What does it mean for financial analysis? Treat it as a starting point, not a conclusion Integrate it with other financial statements And you’ll get a 360-degree view 👉 What other limitations do you think need more attention? —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate ➕ Follow me for accounting & finance insights

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Quickly Increase Business Cash Flow In 3 Key Steps 👇 Accounts Receivable (A/R) Factoring Can offer quick liquidity to businesses in need It's a useful finance tool to accelerate cash flow A/R factoring allows businesses To sell their outstanding invoices to a third party Known as a factor, at a discount This way, the business gets immediate cash While the factor aims to make a profit When the invoices are paid in full Your 3 Steps to Perform A/R Factoring: 1️⃣ Evaluate the Credibility of the Factor: Before you enter a factoring agreement, research the factor's reputation and past dealings. Not all factors offer the same terms or services. 2️⃣ Transparent Fee Structures: Ensure you understand the fee structure. For instance, if you're selling an invoice of $10,000 and the factor charges a 3% fee, you'll receive $9,700 upfront. 3️⃣ Recourse vs. Non-recourse Factoring: Recourse Factoring: If the customer doesn't pay the invoice, you're responsible for buying it back or replacing it with a qualifying invoice. Non-recourse Factoring: The factor assumes the risk of non-payment. However, this often comes with higher fees. —--------------- Here’s an example to help illustrate: Imagine you run a B2B tech company, TechSavvy. You have invoices worth $100,000 due in 90 days. To meet immediate operational costs, you decide to factor these invoices. You approach FactorFast, who offers a non-recourse factoring deal at a 5% fee. You receive $95,000 immediately, while FactorFast will now wait for the invoices to be paid. —--------------- 👉 Did I miss anything? Comment below —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate ➕ Follow me for accounting & finance insights

8 Business Budget Methodologies A CFO's guide 👇🏼 Budgeting is key to successful biz planning But with myriad methodologies available Which one is right for your business? Let's break them down: 1️⃣ Incremental Budgeting: It begins with the current period's budget and adds/subtracts based on new data. Best for: Stable industries without much flux. Watch out for: May perpetuate past inefficiencies. 2️⃣ Zero-Based Budgeting: Start from scratch each period. Every expense must be justified. Best for: Organizations looking for an overhaul or to eliminate redundant costs. Watch out for: Can be time-consuming and requires thorough review. 3️⃣ Activity-Based Budgeting: Expenses are allocated based on activities that incur costs. Best for: Service industries or any sector wanting to link costs to performance. Watch out for: Can be complex; requires detailed activity analysis. 4️⃣ Value Proposition Budgeting: Allocate funds based on activities that offer the most value. Best for: Organizations focused on ROI. Watch out for: Requires clear understanding of value drivers. 5️⃣ Rolling (or Continuous) Budgets: Constantly updated by adding a new period (e.g., month or quarter) as the last one completes. Best for: Volatile industries where rapid changes are frequent. Watch out for: Demands regular updates, so can be labor-intensive. 6️⃣ Flexible Budgeting: Adjusts as volume or activity levels change. Best for: Industries with unpredictable sales volumes like retail. Watch out for: Needs frequent recalibration. 7️⃣ Static Budgeting: Fixed budget, unaffected by business volume or activity changes. Best for: Small businesses with predictable expenses. Watch out for: Limited flexibility can cause variances. 8️⃣ Project Budgeting: Specifically designed for individual projects. Best for: Construction, event planning, or other project-based industries. Watch out for: Overemphasis might neglect overarching business needs. —--------------- Choose a method that mirrors your: 1. Company's goals 2. Industry standards 3. Operational complexities 👉 Did I miss anything? Comment below —--------------- Hi! I’m Nathan Liao, Founder & CEO of: 🚀 CMA Exam Academy dot com - Pass the CMA exam on your first attempt! - 16-week Accelerator program (link in bio) - Students in 120 countries. 92% exam pass rate ➕ Follow me for accounting & finance insights