1. FINANCE & ACCOUNTING Week 7 Dr. Thomas Webb

2. I am not an accountant or a financial manager. I have a doctoral area in finance, whatever good that is. I am no expert in this stuff, BUT maybe that is good. I have been a bookkeeper for a number of companies. I have done financial analysis for companies. I ask many of the right questions. I was CEO/President of a business with $50 million in sales & COO of a major NYSE company. I’ve read thousands of financial statements and still don’t understand most of what I read. Why should you listen to me on this?

3. I have given you a good set of chapter notes and a number of great sources of information. That is one thing I have done that you will be able to use later in your life.. I can’t teach you about what financial statement are, if you have had the finance course you know and if you haven’t you will learn – hopefully I can give you some insights into what I have found to be important from someone who has used them to make decisions for many years. What can I hope to accomplish?

4. WEBB’S TOP TEN [well OK 20] LESSONS IN FINANCE. Here are some of the lessons I have learned that generally are NOT covered in the finance course. Beta Version 1.001

5. 1.Rich helps a lot ! 2.Get a really good accountant that knows your industry and a good financial advisor. 3.For small businesses the effective management of cash is THE SINGLE MOST IMPORTANT ELEMENT OF FINANCE. 4.For small businesses the lack of adequate capital is a major cause of failure. 5.You have to know enough to ask the right questions. Great Insights 1 to 5 Well at least little insights!

6. 6.You have to spend time on the finances. 7.Know enough to smell a rat! 8.If you avoid the truth and on’t address the problems, you lose. 9.Cheap is good! 10.Sensitivity analysis tells you which number are most important Great Insights 6-10 Well at least little insights!

7. 11.Trend Analysis is always important 12.Be particularly careful of bad decisions that will box you in. 13.Don’t forget about lying with numbers. Be very cautious of financial statements. Don’t take them at face value - EVER. 14.EVERY key executive whether HR, marketing or finance MUST understand the financial keys and status of the company. 15.If you can’t figure out a debit and a credit – get a cheat sheet! Great Insights 11-15 Well at least little insights!

8. 16.Always do due diligence on everything and everyone. 17.The growth trap is important, if you don’t’ address it a very successful business will fail. 18.Remember who is paying the bills – The customers! 19.So in the end what do you need! 20.What would you add to make it an even 20? Great Insights 16-20 Well at least little insights!

9. The Balance Sheet Using the balance sheet data Problems with the balance sheet The Income Statement Using the data Problems with the income statement The Cash Flow Statement How to increase cash flow Key importance and how compute Let’s Talk about the Statements

10. Gross profit vs. Marginal Contribution Overhead EBIT Disaggregation Good will Amortization Depreciation Inventory turnover Debit and Credit Sunk Costs Some Random Terms to Contemplate

11. Ratios and Analysis They are just numbers, it is how you use them that counts. Liquidity and Profitability Efficiency and Capital Structure Analysis Methods – just a few Packback Breakeven Time Value of Money – DPV, IRR, NPV [If you understand compound interest then you understand this!] Capital Budgeting Some more always important STUFF

12. FinishLine Gotham Building Parker Mountain Products Nathan Mower, Plumber Should he buy the Saw [SM13.1] Vermont Hills Coffee Dalton Dalton Newport Some Examples