Business

Question 1

Cash flow statement

Answer 1

Focuses solely on the in and out of raw cash flow, the cash reality of the business.

Question 2

Major sections of a cash flow statement

Answer 2

Cash from: Operating, Investment, Financing activites

Question 3

CF state: Operating activities?

Answer 3

“Profit and loss” how much was made after interest and taxes. Only fill amortization or depreciation if they are on income statement

Question 4

CF state: Investing activities?

Answer 4

Cash spent re-investing into the business, or cash profited from the sale of a piece of equipment

Question 5

CF state: Financing activities?

Answer 5

Cash received from loans or spent on loan re-payments

Question 6

CF statement: total change in cash equation

Answer 6

Operating + Investing + Financing = TCIC

Question 7

CF state: Ending cash equation

Answer 7

Total change in cash + The beginning balance = EC *Ending cash should match the bank account

Question 8

Take away from cash flow statement?

Answer 8

Use this and an understanding of the business cycle to anticipate times of lower cash flow and/or times of higher demand for cash flow. Make sure the two do not meet!

Question 9

Cash flow forecast?

Answer 9

Cash flow statement on a calendar “Timeline”. To anticipate the future

Question 10

Increase revenue?

Answer 10

Advertising and promotions
Upselling, bundling, and product recommendations
Loyalty programs and email reminders
Raise prices

Question 11

Reduce overhead

Answer 11

Reduced vendor contracts
More affordable vendors
Less expensive materials
Contractor instead of employees

Question 12

Speed up your invoice cycle

Answer 12

incentivize customers to pay you faster (Provide reward discount or freebee) or simply state upfront when the payment is due

Question 13

Balance sheet?

Answer 13

Snapshot of current business as it stands. The statement of the financial position

Question 14

Balance sheet categories

Answer 14

Assests, liabilities, equity

Question 15

Balance sheet: Assets?

Answer 15

what the business owns

Question 16

Balance sheet: Liabilities?

Answer 16

what the business owes others

Question 17

Balance sheet: Equity?

Answer 17

the owners claim to the business

Question 18

What does the Balance sheet show you?

Answer 18

Shows the layer underneath the income and expenses and how valuable the business is.

Question 19

Balance sheet formula

Answer 19

Assets = liabilities + Equity

Question 20

Compare current liabilities to current assets

Answer 20

Assets should cover the liabilities.

Question 21

Fixed assets?

Answer 21

Things you do not plan on selling, but are still valuable. (IE: cash register)

Question 22

Balance sheet: Equity: Member drawing or contribution

Answer 22

Same, just depends if the owner is adding to or taking from the business account

Question 23

Balance sheet: Equity: Retained earnings?

Answer 23

earnings held by the business for either re-investment or paying shareholders

Question 24

Income statement

Answer 24

“profit and loss” shows how profitable the business was over a period of time.

Question 25

Income statement: COGS

Answer 25

“cost of goods sold” only direct cost to produce a product

Question 26

Income statement: gross profit equation?

Answer 26

sales revenue - cogs = GP. looks at profit before considering indirect costs

Question 27

Income statement: general expenses “Indirect”?

Answer 27

All the costs of the business that aren’t COGS (Rent, marketing, equipment)

Question 28

Income statement: EBITDA?

Answer 28

earning before interest, taxes, amortization, depreciation. How profitable the business is after taking into consideration the internal costs (Things you can control)

Question 29

Income statement: Net profit equation?

Answer 29

Total revenue - total expenses = NP. This is the money leftover to pay owners and employees

Question 30

Income statement: what it means?

Answer 30

How much the business makes, spends, or overspends in any area. Shows you areas of high spending or areas that need more spending.

Question 31

What is the “Bottom Line”

Answer 31

The Net profit. The paycheck. Live and Die by this number and never stray from it. Always support it.

Question 32

Overhead

Answer 32

Expenses that have to be paid, even if the business doesn’t earn revenue. These expenses are indirect costs from the product being produced