Oana Labes, MBA, CPA on LinkedIn: Zero Based Budgeting - The Guide - Oana Labes, MBA, CPA | 21 comments (2024)

The CFO BlueprintYour guide to driving business results as the top finance executive.Because every decision, every strategy, and every investment carries weight and consequence.Here are 15 areas to master that can transform your approach as a finance leader, optimize operations, and drive the business forward.1. Budgeting and Forecasting2. Cash Flow Management3. Financial Analysis4. Working Capital Management5. Capital Structure6. Risk Management7. Tax Planning8. Financial Reporting9. Cost Accounting10. Investment Evaluation11. Financial Planning12. Mergers and Acquisitions (M&A)13. ESG-Driven Financial Management14. People Management and Leadership15. Technology and Digital Transformation🎯 If you enjoyed this, please Like, Comment and Share to help your network enjoy it too!What would you add?---🎯Check out my on-demand video courses: Pre-Sale on now for 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/famcol) and 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol)---➡️➡️➡️➡️ Subscribe to my newsletter and get free cheat sheets: https://bit.ly/3T3CtPm➡️➡️➡️ Follow me to grow your business impact and influence with strategic finance➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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The 8 Critical EBITDA Drivers CEOs and CFOs Need to KnowEBITDA is widely abused and mistakes can often cost companiesmillions (more on that here:https://bit.ly/49tBhe2)It is also widely used in Valuations, Performance Management, Comparative Analysis and Commercial Financing.So if you want to improve EBITDA, avoid abuses and mistakes, and follow these 8 critical drivers:---- 💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and get Saturday strategic finance insights and awesome cheat sheets as a welcome gift: https://bit.ly/3T3CtPm-----1️⃣ 𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗚𝗿𝗼𝘄𝘁𝗵🎯 Sales & Marketing Excellence: cutting-edge sales and marketing strategies 🎯 Market & Product Diversification: new markets and products or services.🎯 Customer Lifetime Value Maximization: customer retention and upselling 2️⃣ 𝗖𝗼𝘀𝘁 𝗢𝗽𝘁𝗶𝗺𝗶𝘇𝗮𝘁𝗶𝗼𝗻🎯 Streamline Operations: Eliminate non-essential expenses and streamline operations.🎯 Lean Processes: continuous improvement and lean methodologies.🎯 Supplier Negotiations: lower input costs 3️⃣ 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆🎯 Process Automation: technology for process automation and workforce efficiency.🎯 Supply Chain Optimization: cut costs and shorten delivery timelines.🎯 Inventory Management: advanced inventory strategies to reduce carrying costs.4️⃣ 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆🎯 Market-Based Pricing: pricing strategies to match demand and customer segmentation🎯 Pricing Flexibility: price adjustments in response to market and cost changes.🎯 Dynamic Pricing: dynamic pricing for revenue optimization during peak demand.5️⃣ 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝗥𝗲𝘁𝗲𝗻𝘁𝗶𝗼𝗻🎯 Relationship Building: repeat business and referrals.🎯 Exceptional Customer Support: top-notch customer service to build loyalty.🎯 Feedback Systems: customer feedback to refine products and services.6️⃣ 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 & 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗧𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻7️⃣ 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗣𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽𝘀8️⃣ 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 & 𝗥𝗶𝘀𝗸 𝗠𝗶𝘁𝗶𝗴𝗮𝘁𝗶𝗼𝗻🎯 Debt Restructuring: reduce interest expenses and improve cash flow.🎯 CapEx Optimization: Ensure capital expenditures are driving value 🎯 Hedging Strategies: financial hedges to protect against volatility in commodities, forex, and interest rates.What would you add?-------🎯Check out my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale on now: https://bit.ly/famcol)--------➡️➡️➡️➡️ Subscribe to my newsletter and get free cheat sheets: https://bit.ly/3T3CtPm➡️➡️➡️ Follow me to grow your business impact and influence with strategic finance➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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Gross Profit is not Contribution Margin.Gross Margin is also not Contribution Margin.So then what is Contribution Margin?And how do you use it?---💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and get Saturday strategic finance insights and awesome cheat sheets as a welcome gift: https://bit.ly/3T3CtPm---⚫ Gross Profit is often used interchangeably with Gross Margin, through one is an absolute difference (amount) and the other is a relative difference (percentage).⚫ The real comparison is between Gross Profit and Contribution Margin. ➡️ Note that Gross Profit is what gets reported externally in compliance with local GAAP, but Contribution Margin is what management can use internally to improve pricing and profitability analysisThey may seem alike, but they are distinct metrics with unique insights for profitability analysis.🎯 Gross Profit is the revenue from the sales of a product or service, less all direct costs (COGS or COS)☑️ Formula: Gross Profit (GP) = (Revenue/Selling Price - COGS)☑️ Considers: direct materials, direct labor, and manufacturing fixed and variable overheads. ☑️ Excludes: variable costs unrelated to production, such as sales commissions or shipping costs.☑️ Used to understand the profitability of the entire product or service portfolio🎯 The Contribution Margin (CM) is the sales price of one unit of a product or service, less all unit variable costs (direct materials, direct labor, and indirect product costs).☑️ Contribution Margin (CM) is (despite its name which suggests a ratio) a measure of absolute value calculated in currency units ($).☑️ Formula: Contribution Margin (CM) = (Sales Price per unit - Variable Cost per unit)☑️ Considers: direct materials, direct labor, variable manufacturing overhead, variable selling and variable marketing.☑️ Used to: make decisions related to individual product or service pricing and sales mix, because it shows the incremental profit generated by each additional unit sold.Do you use Contribution Margin in your pricing and profitability analysis?What would you add? ----------🎯 Accelerate your career and grow your business with my highly-rated on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-order: https://bit.ly/famcol)---------➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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Controllership vs FP&A vs. Strategic FinanceDo you know the difference?---💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and get Saturday strategic finance insights and an awesome cheat sheet pack as a welcome gift: https://bit.ly/3T3CtPm---𝗧𝗵𝗲𝘀𝗲 𝘁𝗵𝗿𝗲𝗲 𝗳𝘂𝗻𝗰𝘁𝗶𝗼𝗻𝘀 𝗮𝗿𝗲 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝘀𝗮𝗺𝗲 𝗖𝗙𝗢 𝗢𝗳𝗳𝗶𝗰𝗲, 𝗮𝗻𝗱 𝘁𝗵𝗲𝘆 𝘄𝗼𝗿𝗸 𝗮𝘀 𝗮 𝘁𝗲𝗮𝗺, 𝗯𝘂𝘁 𝘁𝗵𝗲𝘆 𝗰𝗼𝘂𝗹𝗱𝗻’𝘁 𝗯𝗲 𝗺𝗼𝗿𝗲 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗶𝗻 𝗳𝗼𝗰𝘂𝘀, 𝘀𝗸𝗶𝗹𝗹𝘀 𝗮𝗻𝗱 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀.𝗖𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗲𝗿𝘀𝗵𝗶𝗽:🎯 focuses on accounting and financial reporting🎯 responsible for ensuring that financial statements are accurate, timely, and compliant with local GAAP (Generally Acceptable Accounting Principles)🎯 roles:Controller, Assistant Controller, Accounting Manager🎯 competencies: accounting and financial reporting,budgeting and forecasting, internal controls, regulatory compliance🎯 key relationships: other finance functions, other departments (operations, sales, procurement)𝗙𝗣&𝗔 (𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴 𝗮𝗻𝗱 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀):🎯 focuses on insights into financial performance for strategic decision-making🎯 responsible for providing guidance on strategic business decisions based on financial data and analysis🎯 roles: FP&A Manager, Financial Analyst, Budget Analyst🎯 competencies: financial modeling, data analysis and visualization, budgeting and forecasting, strategic thinking, communication and influence🎯 key relationships: other finance functions, other departments (sales, operations, procurement)𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗙𝗶𝗻𝗮𝗻𝗰𝗲:🎯 focuses on the long-term financial planning and analysis of the company🎯 provides insights into investment decisions, mergers and acquisitions, and capital raising🎯 roles: Director of Strategic Finance, Corporate Development Manager, Treasury Manager🎯 competencies: financial analysis and modeling, strategic thinking, investment evaluation, mergers and acquisitions, capital markets, corporate banking, communication and leadership🎯 key relationships: other finance functions, other departments (legal and operations) to execute investment and acquisition opportunitiesWhich one appeals to you the most?---🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale discounts on now for a limited time: https://bit.ly/famcol)---➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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FREE Cash Flow MasterclassA free webinar + 10 essential Cash Flow coursesAll to help you Master Cash Flow - the lifeblood of every business.🎯 𝐖𝐚𝐧𝐭 𝐭𝐡𝐞 𝐝𝐨𝐰𝐧𝐥𝐨𝐚𝐝𝐚𝐛𝐥𝐞 𝐏𝐃𝐅 𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐭𝐨 𝐬𝐚𝐯𝐞 𝐟𝐨𝐫 𝐥𝐚𝐭𝐞𝐫?👉 𝐋𝐢𝐤𝐞, 𝐒𝐡𝐚𝐫𝐞 𝐚𝐧𝐝 𝐂𝐨𝐦𝐦𝐞𝐧𝐭 𝐬𝐨 𝐭𝐡𝐢𝐬 𝐩𝐨𝐬𝐭 𝐜𝐚𝐧 𝐫𝐞𝐚𝐜𝐡 𝐞𝐯𝐞𝐫𝐲𝐨𝐧𝐞 𝐰𝐡𝐨 𝐧𝐞𝐞𝐝𝐬 𝐭𝐨 𝐫𝐞𝐚𝐝 𝐢𝐭!1// How to connect Cash with Profit: https://lnkd.in/ecMzMnd62// The 3 Main Cash Flow Drivers: https://lnkd.in/eEDWBzEA3// Cash Inflows and Outflows: https://lnkd.in/ei8vdP_B4// Cash Flow Statement: Direct or Indirect: https://lnkd.in/e-NBhUG45// The Cash Conversion Cycle: https://lnkd.in/eWZgYGBQ6// The Business Cash Flow Dashboard for CFOs: https://lnkd.in/etSAAjCU7// The 5 Steps to manage your cash flow: https://lnkd.in/eXckPBqb8// Cash Flows in Capital Budgeting: https://lnkd.in/eBFDr9F99// 16 Cash Flow KPIs: https://lnkd.in/eQEr7ADj10// The Master Budget Flow: https://lnkd.in/e-J9Raq8🎯 𝐇𝐞𝐥𝐩 𝐦𝐞 𝐬𝐩𝐫𝐞𝐚𝐝 𝐭𝐡𝐞 𝐤𝐧𝐨𝐰𝐥𝐞𝐝𝐠𝐞 𝐰𝐢𝐭𝐡 𝐭𝐡𝐢𝐬 𝐅𝐑𝐄𝐄 Cash Flow Masterclass👉 𝐋𝐢𝐤𝐞, 𝐒𝐡𝐚𝐫𝐞 𝐚𝐧𝐝 𝐂𝐨𝐦𝐦𝐞𝐧𝐭 𝐬𝐨 𝐭𝐡𝐢𝐬 𝐩𝐨𝐬𝐭 𝐜𝐚𝐧 𝐫𝐞𝐚𝐜𝐡 𝐞𝐯𝐞𝐫𝐲𝐨𝐧𝐞 𝐰𝐡𝐨 𝐧𝐞𝐞𝐝𝐬 𝐢𝐭!--------------------🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale discounts on now for a limited time: https://bit.ly/famcol)-------------------➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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Cost - Volume - Profit Analysis will help you Break Even.It will also help you maximize your Profits.Optimize Cost Management.And manage your Risks.---------💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and getSaturday strategic finance insights to compound your business impact and influence. Subscribe today and get an awesome cheat sheet pack as a welcome gift: https://bit.ly/3T3CtPm---------➡️CVP is an extremely valuable management accounting tool used to analyze the relationship between your company's sales volume, costs, and profits. The underlying assumption of CVP is that costs can be either fixed or variable, depending on whether they vary with changes in sales volumes or not.➡️The CVP Analysis relies on 2 concepts: Contribution Margin and Break Even.🎯 𝗕𝗮𝘀𝗶𝗰 𝗖𝗩𝗣 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀1️⃣ The Contribution Margin (CM) is the sales price of your product or service, less all its variable costsContribution Margin = Sales Revenue - Variable CostsContribution Margin Ratio = Contribution Margin / Sales Revenue2️⃣ You Break Even once you are able to use the Contribution Margin from your sales to cover all your Fixed CostsBreak-Even Point (in units) = Fixed Costs / Contribution Margin per UnitBreak-Even Point (in dollars) = Fixed Costs / Contribution Margin Ratio➡️After covering fixed costs, each new dollar of Contribution Margin will become straight-up profit, because fixed costs for the period have already been covered.🎯 𝗔𝗱𝘃𝗮𝗻𝗰𝗲𝗱 𝗖𝗩𝗣 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀3️⃣ To earn a specific amount of Profit, add that to the total fixed burdento cover with your calculated Contribution Margin Ratio.Profit Target = (Fixed Costs + Target Profit) / Contribution Margin Ratio4️⃣ To understand how much your sales value can decline before you start losing money, calculate your Margin of Safety (difference to your break even point).Margin of Safety = Expected or Actual Sales - Break-even PointMargin of Safety % = (Margin of Safety / Expected or Actual Sales) x 1005️⃣ To perform CVP on multiple products>> determine contribution margin per product>> determine sales mix>> determine weighted average contribution margin>> calculate break-even point in units and allocate it by product based on your sales mix➡️What would you add?-------------------🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale discounts on now for a limited time: https://bit.ly/famcol)-------------------➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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20 Cost KPIs to choose from, benchmark, forecasts, monitor and manage.--------💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and getSaturday strategic finance insights to compound your business impact and influence. Subscribe today and get an awesome cheat sheet pack as a welcome gift: https://bit.ly/3T3CtPm-------𝗖𝗼𝘀𝘁 𝗼𝗳 𝗚𝗼𝗼𝗱𝘀 𝗦𝗼𝗹𝗱 (𝗖𝗢𝗚𝗦) COGS = Direct Materials + Direct Labor + Manufacturing OverheadCOGS = Opening Inventory + Purchases - Ending Inventory🎯 Your direct costs associated with producing a product or delivering a service, expressed in absolute terms or as a percentage of revenue𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗥𝗮𝘁𝗶𝗼: Operating Expenses / Net Sales x 100🎯 Evaluates how much of the total sales is consumed by operating expenses.𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗖𝗼𝘀𝘁 𝗥𝗮𝘁𝗶𝗼: Variable Costs / Sales x 100🎯 Assesses the proportion of sales that is consumed by variable costs.𝗙𝗶𝘅𝗲𝗱 𝗖𝗼𝘀𝘁 𝗥𝗮𝘁𝗶𝗼: Fixed Costs / Sales x 100🎯 Evaluates the proportion of sales that is consumed by fixed costs.𝗗𝗶𝗿𝗲𝗰𝘁 𝗟𝗮𝗯𝗼𝗿 𝗖𝗼𝘀𝘁 %: Direct Labor Costs / Sales x 100🎯 Measures the percentage of sales that goes towards compensating the labor directly involved in producing a product.𝗦𝗮𝗹𝗲𝘀 & 𝗠𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴 𝗥𝗮𝘁𝗶𝗼: Sales & Marketing Expenses / Sales x 100🎯 Indicates the percentage of sales spent on sales and marketing activities.𝗥𝗲𝘀𝗲𝗮𝗿𝗰𝗵 & 𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁 (𝗥&𝗗) 𝗥𝗮𝘁𝗶𝗼: R&D Expenses / Sales x 100🎯 Measures the percentage of sales invested in research and development activities.𝗚𝗲𝗻𝗲𝗿𝗮𝗹 & 𝗔𝗱𝗺𝗶𝗻𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝘃𝗲 (𝗚&𝗔) 𝗥𝗮𝘁𝗶𝗼: G&A Expenses / Sales x 100🎯 Evaluates the percentage of sales consumed by general and administrative expenses.𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝗧𝘂𝗿𝗻𝗼𝘃𝗲𝗿: Cost of Goods Sold / Average Inventory🎯 Indicates how many times a company's inventory is sold and replaced over a period.𝗗𝗮𝘆𝘀 𝗶𝗻 𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆: 365 / Inventory Turnover🎯 Measures the average number of days items stay in inventory before being sold.𝗜 𝗿𝗮𝗻 𝗼𝘂𝘁 𝗼𝗳 𝘀𝗽𝗮𝗰𝗲 ➡️ 𝗟𝗶𝗻𝗸𝗲𝗱𝗶𝗻 𝗿𝗲𝘀𝘁𝗿𝗶𝗰𝘁𝘀 𝗽𝗼𝘀𝘁𝘀 𝘁𝗼 𝟯,𝟬𝟬𝟬 𝗰𝗵𝗮𝗿𝗮𝗰𝘁𝗲𝗿𝘀. 𝗥𝗲𝗮𝗱 𝘁𝗵𝗲 𝗳𝘂𝗹𝗹 𝗽𝗼𝘀𝘁 𝗶𝗻 𝘁𝗵𝗶𝘀 𝘄𝗲𝗲𝗸'𝘀 𝗶𝘀𝘀𝘂𝗲 𝗼𝗳 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗚𝗲𝗺💎 ➡️What would you add?---🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale discounts on now for a limited time: https://bit.ly/famcol)---➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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14 Types of Costs you Should Know---------💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and getSaturday strategic finance insights to compound your business impact and influence. Subscribe today and get an awesome cheat sheet pack as a welcome gift: https://bit.ly/3T3CtPm---------🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗥𝗲𝗹𝗲𝘃𝗮𝗻𝗰𝗲 𝘁𝗼 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗠𝗮𝗸𝗶𝗻𝗴- Relevant/Incremental Costs: Future costs that are relevant to decision-making- Irrelevant/Sunk Costs: Past costs that are irrelevant to decision-making🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗙𝘂𝗻𝗰𝘁𝗶𝗼𝗻- Product Costs: Inventoried costs associated with the production of products or services- Period Costs: Costs not related to production and expensed in the period- Manufacturing Costs: total costs associated with the production of goods, including direct materials, direct labor, and manufacturing overhead- Operating Costs: total costs associated with day to day operations- Conversion Costs: costs incurred when converting raw materials into finished products- Overhead Costs: indirect costs not tied to a specific product or service, often including items like rent, utilities, and administration costs (can be manufacturing or non-manufacturing)🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗧𝗿𝗮𝗰𝗲𝗮𝗯𝗶𝗹𝗶𝘁𝘆- Direct Costs: Costs that can be traced directly to a specific cost object- Indirect Costs: Costs that cannot be traced directly to a specific cost object🎯 𝗖𝗼𝘀𝘁𝘀 𝗯𝘆 𝗕𝗲𝗵𝗮𝘃𝗶𝗼𝗿- Fixed Costs: Costs that remain constant regardless of the level of production or services- Variable Costs: Costs that vary in direct proportion to the level of production- Semi-variable Costs/Mixed Costs: Costs that contain both fixed and variable components- Step Costs: Costs that remain fixed only for a certain volume or range of activity𝗕𝗢𝗡𝗨𝗦:🎯 Economic Costs: the total cost of producing your goods or services, including both explicit costs (such as wages and materials) and implicit costs (such as opportunity costs).🎯 Allocated Costs: indirect costs that you cannot directly trace to a specific product or service, and which you instead distribute to products based on a pre-determined method ideally driven by a cause-effect relationshipWhich one did I miss?---🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale on now: https://bit.ly/famcol)---➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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16 Powerful Cost Saving Strategies You Need to Know.---------------💎If you enjoyed this post, you will love my weekly newsletter! Join 40,000+ subscribers and getSaturday strategic finance insights to compound your business impact and influence. Subscribe today and get an awesome cheat sheet pack as a welcome gift: https://bit.ly/3T3CtPm---------------Sooner or later, you will need to start making strategic decisions in your company.Here's a list of 16 powerful options you can consider to reduce your costs.🎯 Just-In-Time Inventory System (JIT):- Maintain minimal inventory- Order as required- Reduce holding costs- Avoid overstocking🎯 Vendor-Managed Inventory (VMI):- Suppliers manage inventory- Inventory off company balance sheet- Needed for production🎯 Consolidation of Suppliers:- Reduce supplier numbers- Streamline procurement- Bulk-purchase discounts🎯 Outsourcing Production:- Don't own factories- Outsource production🎯 Offloading Fixed Assets & Leasing:- Sell and lease back assets- Convert fixed to variable costs- Improve financial ratios🎯 Operational Efficiency:- Refine processes- Use technology- Lower operation costs🎯 Switch to Variable Cost Models:- Use contract employees- Convert fixed to variable labor🎯 Strategic Supplier Relationships:- Strong supplier relationships- Negotiate favorable terms- Lock-in prices, priority access🎯 Vertical Integration:- Control supply chain- Eliminate markup- Cost savings🎯 Adopting Technology and Automation:- Automation solutions- Reduce labor-intensive tasks- Lower labor costs🎯 Focus on Core Competencies:- Spin off non-core segments- Focus on primary competencies- Reduce overhead costs🎯 Shared Service Models:- Centralize back-office- Economies of scale- Reduce redundancy🎯 Energy Efficiency and Sustainability:- Invest in energy efficiency- Sustainable practices- Long-term savings🎯 Economies of Scale:- Increase production volume- Spread fixed costs- Reduce cost per unit🎯 Relocating Operations:- Move operations- Lower costs regions- Tax incentives, favorable regulations🎯 Product Simplification:- Reduce product complexity- Streamline operations- Reduce diverse product costsWhat would you add?---🎯 Accelerate your career and grow your business with my on-demand video courses 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (countless 5* ratings: https://bit.ly/cfmol) and 𝗧𝗵𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗹𝗮𝘀𝘀 (pre-sale on now: https://bit.ly/famcol)---➡️➡️➡️➡️ Follow me to grow your impact and influence with strategic finance➡️➡️➡️ Visit my website for 5* masterclasses, checklists and cheat sheets➡️➡️ Grab my free strategic finance cheat sheets: https://bit.ly/3T3CtPm➡️ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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