Podcasts about financial statement analysis

Send us a textData drives nearly every aspect of modern life, from the algorithms suggesting what you should watch tonight to the autonomous vehicles navigating city streets. Yet in the world of finance—where you might expect data to reign supreme—the relationship between information and decision-making is surprisingly complicated (and relatively new).Professor Mike Gallmeyer pulls back the curtain on this fascinating paradox, revealing why financial markets present unique challenges for data-driven approaches. While Tesla collects millions of data points daily to perfect self-driving technology, investors working with a century of stock market returns have barely over a thousand data points to analyze. This fundamental limitation—what Gallmeyer calls the difference between "big data" and finance's "small data" reality—creates profound implications for how we should think about investment decisions.The conversation delves into the historical evolution of financial data, from the pre-1960s era when decisions relied heavily on intuition and "soft information," through the development of the CRISP database at the University of Chicago, to today's sophisticated algorithmic trading systems. Gallmeyer explains how market participants continuously adapt to new information sources, creating an ever-evolving landscape where yesterday's winning strategy becomes tomorrow's conventional wisdom. This endogenous change within financial markets makes them fundamentally different from systems where data collection leads to steady, predictable improvement.For anyone fascinated by markets, data science, or the intersection of human judgment and quantitative analysis, this episode offers valuable perspective on the promises and limitations of data-driven decision making. Whether you're managing your retirement portfolio or simply curious about how markets function, you'll gain insights into why certain problems remain resistant to even our most sophisticated analytical tools—and where human judgment still provides irreplaceable value.Show Notes:Dimson, Marsh, & Staunton, Global Investment Returns Yearbook 2025Kim, Muhn, et al., Financial Statement Analysis with Large Language Models (2024)New York Fed Staff NowcastFederal Reserve Bank of Atlanta, GDPNowThanks for listening! Please be sure to review the podcast or send your comments to me by email at info@not-another-investment-podcast.com. And tell your friends!

Today on the podcast you'll hear the audio version of our brewery financial round table meeting. This month we focus on how to how to analyze your financial statements to unlock profitable opportunities.  In our monthly workshops, brewery owners and managers share ideas and best practices to improve profits and cash flows. To join our membership or learn more, visit the Beer Business Finance Association. SummaryHow to use financial trend analysis to spot problems with gross marginsSimple break-even analysis toolsTactics to present the income statement on a "per barrel" basisResourcesGet the free brewery financial training newsletterLearn more about our network of brewery owners and managers

In this episode of What's New at CFI, we are talking about a course that is going to help make everyone's job a little bit easier. The course itself may be in the context of financial statement analysis, but in today's world, everything is data-driven, and in turn, so is almost every job. Spend some time with Glenn as he talks about what AI can do, what it is best at, and how we can interact with it now that generative AI gives the layperson a friendly user interface.If you want to learn and practice how to make your working day a little easier, this is a course you don't want to miss.

In the latest episode of The Food Professor Podcast, presented by Caddle, we welcome a special guest, Zeeshan Fazal, Regional Director and Agrifood expert from Export Development Canada (EDC). Recorded live at the SIAL food innovation show in Montreal, Zeeshan explains how EDC supports Canadian companies in expanding their reach beyond borders, including into the United States, by providing financial tools, trade expertise, and valuable market connections.Michael, joining from Chicago, shares his experiences in the Windy City's vibrant food scene, recounting a visit to El Che restaurant and commenting on Chicago's competitive food service industry. He also reminds listeners about the upcoming Coffee Association of Canada conference on November 14th in Markham, where tickets quickly sell out.The episode focuses on critical industry topics, including the staggering waste in Canada's dairy sector, with over 6 billion litres of milk dumped since 2012, as highlighted in a recent ScienceDirect study. The hosts also touch on Canada-India trade relations' complexities and challenges. The launch of Maple Leaf's new pork division, Canada Packers, is also discussed, followed by commentary on the latest Consumer Price Index (CPI) data, which signals growing concerns about the competitiveness of Canada's agrifood sector.https://www.sciencedirect.com/science/article/pii/S0921800924003100?dgcid=coauthorhttps://coffeeassoc.com/annual-conference/ About ZeeshanZeeshan Fazal is a Regional Manager at EDC, responsible for a team of Relationship Managers supporting Canadian companies to penetrate, grow and succeed internationally. He is also responsible to strategically increase EDC's support to Québec companies in Agriculture and Agrifood sectors.Mr. Fazal has significant experience in assisting Manufacturing, Technology and Innovation companies to go, grow and succeed internationally. Prior to his appointment to the Business Development team, Mr. Fazal held various underwriting positions for Accounts Receivable Insurance, Bank Guarantees and Loan Guarantees. He was also a Lean Sustainability Advisor where he collaborated closely with internal stakeholders to help lead projects, improve operational efficiencies and client communication processes.  514-876-7115  zfazal@edc.ca  edc.ca Outside of EDC, Mr. Fazal was a lecturer at McGill University where he taught International Finance, Corporate Finance and Financial Statement Analysis. Most recently, he also taught a course on Business Valuation at the Smith School of Business at Queens University. Furthermore, he taught CITP professional designation courses on Global Value Chain and International Trade Finance. About EDCExport Development Canada is Canada's export credit agency. We are dedicated to helping Canadian companies, of all sizes, go, grow and succeed beyond our borders. As international risk experts, we provide them with knowledge, financing, insurance and connections. We also provide financial solutions to global companies to facilitate and grow purchases from Canadian companies. We take on risk, so they can take on the world. Learn more at www.edc.ca. Mr. Fazal holds a Master of Business Administration from the Smith School of Management (Queens University), a bachelor's degree in Finance, Accounting and Biology from McGill University. He is also a Certified International Trade Professional (CITP | FIBP). The Food Professor #podcast is presented by Caddle. About UsDr. Sylvain Charlebois is a Professor in food distribution and policy in the Faculties of Management and Agriculture at Dalhousie University in Halifax. He is also the Senior Director of the Agri-food Analytics Lab, also located at Dalhousie University. Before joining Dalhousie, he was affiliated with the University of Guelph's Arrell Food Institute, which he co-founded. Known as “The Food Professor”, his current research interest lies in the broad area of food distribution, security and safety. Google Scholar ranks him as one of the world's most cited scholars in food supply chain management, food value chains and traceability.He has authored five books on global food systems, his most recent one published in 2017 by Wiley-Blackwell entitled “Food Safety, Risk Intelligence and Benchmarking”. He has also published over 500 peer-reviewed journal articles in several academic publications. Furthermore, his research has been featured in several newspapers and media groups, including The Lancet, The Economist, the New York Times, the Boston Globe, the Wall Street Journal, Washington Post, BBC, NBC, ABC, Fox News, Foreign Affairs, the Globe & Mail, the National Post and the Toronto Star.Dr. Charlebois sits on a few company boards, and supports many organizations as a special advisor, including some publicly traded companies. Charlebois is also a member of the Scientific Council of the Business Scientific Institute, based in Luxemburg. Dr. Charlebois is a member of the Global Food Traceability Centre's Advisory Board based in Washington DC, and a member of the National Scientific Committee of the Canadian Food Inspection Agency (CFIA) in Ottawa. Michael LeBlanc is the president and founder of M.E. LeBlanc & Company Inc, a senior retail advisor, keynote speaker and now, media entrepreneur. He has been on the front lines of retail industry change for his entire career. Michael has delivered keynotes, hosted fire-side discussions and participated worldwide in thought leadership panels, most recently on the main stage in Toronto at Retail Council of Canada's Retail Marketing conference with leaders from Walmart & Google. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience with Levi's, Black & Decker, Hudson's Bay, CanWest Media, Pandora Jewellery, The Shopping Channel and Retail Council of Canada to his advisory, speaking and media practice.Michael produces and hosts a network of leading retail trade podcasts, including the award-winning No.1 independent retail industry podcast in America, Remarkable Retail with his partner, Dallas-based best-selling author Steve Dennis; Canada's top retail industry podcast The Voice of Retail and Canada's top food industry and one of the top Canadian-produced management independent podcasts in the country, The Food Professor with Dr. Sylvain Charlebois from Dalhousie University in Halifax.Rethink Retail has recognized Michael as one of the top global retail experts for the fourth year in a row, Thinkers 360 has named him on of the Top 50 global thought leaders in retail, RTIH has named him a top 100 global though leader in retail technology and Coresight Research has named Michael a Retail AI Influencer. If you are a BBQ fan, you can tune into Michael's cooking show, Last Request BBQ, on YouTube, Instagram, X and yes, TikTok.Michael is available for keynote presentations helping retailers, brands and retail industry insiders explaining the current state and future of the retail industry in North America and around the world.

In this episode Glenn Hopper talks to the researcher responsible for the groundbreaking study which found that AI is better at conducting financial analysis than humans. Alex Kim, University of Chicago Booth School of Business, provides a full overview of his findings, methodology and the impact on FP&A, CFOs and finance from the attention-grabbing study “Financial Statement Analysis with Large Language Models”. The analysis, which made headlines across the world, found AI produces a 60% rate of accuracy in predictive financial performance. Human experts' accuracy tends to fall between 53% and 57%. In this episode Alex Kim reveals the implications for finance professionals:   Alex's finance background – from a Master's degree in Business Administration to a Accounting and a dual Bachelor's degree in Economics and Business Administration- to his doctoral and PHD career How he self taught himself coding and AI Practically how do finance pros take the insights from this paper and use them in their day to day? Why the model didn't do so well with loss-making or startup companies  Improving on the performance models using a startup company data How can you combine AI and Human Intelligence  What humans can do better than AI in financial forecasting  Future research projects into information processing for investors  How to keep up to date on the latest ground breaking research in AI and Finance My military experience stationed with US soldiers in South Korea My favorite Excel feature ( and why one thing about Excel still cannot be rivaled). Read the full paper here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4835311 Check out the analyzer for yourself here: https://chatgpt.com/g/g-9P3sIn487-financial-statement-analyzer Follow Alex Kim on Linkedin Ph.D. Student at the University of Chicago: https://www.linkedin.com/in/alexgunwookim

SponsorsLiveFlow - http://accountingpodcast.promo/liveflowRightRev - http://accountingpodcast.promo/rightrevMakers Hub - http://accountingpodcast.promo/makershubChapters(00:38) - Blake's Conference Adventures (03:13) - AI and the Future of Auditing (05:16) - Insights from the IMA Conference (10:00) - The AI Tipping Point (14:48) - Microsoft Announces Delay of Their Ai Recall Tool (21:33) - AI in Financial Statement Analysis (34:12) - Community and Future Plans (38:08) - Synapse Bankruptcy and What It Means for FinTech Banks (49:50) - PwC and OpenAI Partnership (51:39) - EY Is Spending $1 Billion on Something (53:48) - Big Four Compensation Insights (57:16) - Fake News on Stimulus Checks (01:00:52) - Listener Mail and Advice for Starting a Firm (01:07:27) - Wrap-up and Announcements  Show NotesStudy: ChatGPT Better at Financial Statement Analysis Than Humanshttps://nysscpa.org/news/publications/the-trusted-professional/article/study-chatgpt-better-at-financial-statement-analysis-than-humans-060524PwC to resell ChatGPT Enterprisehttps://www.accountingtoday.com/news/pwc-to-become-first-official-reseller-for-openai-for-openais-chatgpt-enterpriseEY US to invest $1 billion in compensation and technology to improve the attractiveness of the accounting professionhttps://www.ey.com/en_us/newsroom/2024/06/ey-us-to-invest-1-billion-in-compensation-and-technologyChange is in the air: And it is helpful.https://www.orcpa.org/news/13ff8628-9c17-43b1-858a-148af698c818:change-is-in-the-air-and-it-is-helpfulPotential deposit shortfall in Synapse bankruptcy falls in regulatory grey areahttps://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/potential-deposit-shortfall-in-synapse-bankruptcy-falls-in-regulatory-grey-area-82041848Apple brings ChatGPT to Siri as it debuts ‘Apple Intelligence' at WWDC 2024https://www.theguardian.com/technology/article/2024/jun/10/apple-ai-product-launchHow does Sam's Club AI work?https://www.statesman.com/story/news/state/2024/05/02/sams-club-ai-check-receipt-exit-stores-texas-locations/73526045007/ How fake stories about IRS stimulus checks took over the internethttps://www.fastcompany.com/91138837/fake-stories-irs-stimulus-checks-flood-internet-google-newsFact Check: Is The IRS Really Giving An $8700 Stimulus Check?https://finance.yahoo.com/news/fact-check-irs-really-giving-192246766.htmlNeed CPE?Get CPE for listening to podcasts with Earmark: https://earmarkcpe.comSubscribe to the Earmark Podcast: https://podcast.earmarkcpe.comGet in TouchThanks for listening and the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and Instagram. If you like what you hear, please do us a favor and write a review on Apple Podcasts or Podchaser. Call us and leave a voicemail; maybe we'll play it on the show. DIAL (202) 695-1040.SponsorshipsAre you interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus.Need Accounting Conference Info? Check out our new website - accountingconferences.comLimited edition shirts, stickers, and other necessitiesTeePublic Store: http://cloudacctpod.link/merchSubscribeApple Podcasts: http://cloudacctpod.link/ApplePodcastsYouTube: https://www.youtube.com/@TheAccountingPodcastSpotify: http://cloudacctpod.link/SpotifyPodchaser: http://cloudacctpod.link/podchaserStitcher: http://cloudacctpod.link/StitcherOvercast: http://cloudacctpod.link/OvercastClassifiedsWant to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Let the listeners of The Accounting Podcast know by running a classified ad. Go here to create your classified ad: https://cloudacctpod.link/RunClassifiedAdTranscriptsThe full transcript for this episode is available by clicking on the Transcript tab at the top of this page

In this special episode (part of Datarails' FP&A Con 2024) Glenn hosts an all-star panel to debate AI and FP&A: Hype vs reality.   Join Nicolas Boucher, Christian Martinez, and Gabriela Gutierrez, alongside CFO Glenn Hopper, host of FP&A Today, and an AI thought leader and author. Delve into real-world applications, separating fact from fiction, and gain valuable practical insights into the present and future of AI in financial planning and analysis.    The Guests: Nicolas Boucher, Keynote speaker on AI for Finance & FP&A Christian Martinez, Finance Analytics Manager, Kraft Heinz Gabriela Gutierrez, Financial Planning & Analysis Specialist   In this episode:  How many FP&A pros are using AI in their work - how do you compare vs the results of our poll  The main misconceptions + and what not to do in the  finance and AI era The significance of ChatGPT 4o The biggest barriers to AI adoptions  Practical uses of AI to use today , including forecasting and practical ways to save time  FP&A AI use cases that have shocked the panel  Which FP&A processes could most use AI help? How to get started practically AI capabilities in existing tools  such as PowerBI Why 2024 is about Python as the tool to learn to break the barrier of AI Automation in finance's relationship with other departments Creating your own chatbot services The importance of data maturity (before AI maturity) How you will start to see AI inbuilt to all your finance techstack Download financial data (balance sheets, savings) from a company on  Yahoo Finance and plug into Chat GPT 4o (Prompt: Act as a management consultant and analyze this data with an FP&A lens” (and getting volume analysis, volatility analysis, moving averages..)  FP&ACon 2024 (on demand) https://www.datarails.com/events/fpa-con-2024/ Join the AI Finance Club: https://ai-finance.club/  “Financial Statement Analysis with Large Language Models,”

Thanks to our Partners, NAPA TRACS, AutoFix Auto Shop Coaching, and Today's Class Join a discussion with multi-shop operators Dwayne Myers and Rick Levitan, as well as CPA Hunt Demarest, on the intricacies of purchasing a business. They cover the necessity of due diligence, understanding financials, and the emotional aspects of negotiation. The panel shares personal experiences, highlighting the importance of realistic financial projections, environmental assessments, and the role of goodwill in valuations. They advise on building strong banking relationships, scrutinizing financial statements, and respecting sellers' emotional ties, emphasizing patience and strategy for successful acquisitions in the automotive industry. Hunt Demarest, CPA, Paar Mellis and Associates, Business by the Numbers Podcast Dwayne Myers, Dynamic Automotive, 6 locations, Maryland. Dwayne's previous episodes HERE. Rick Levitan, Managing Director, Auto Stream Car Care, MD. Show Notes Real Estate Strategies with Rick Levitan [AW 170]: https://remarkableresults.biz/remarkable-results-radio-podcast/aw170/ The challenges of obtaining accurate financials (00:02:03) Discussion on the challenges of obtaining accurate financials when buying a business. The importance of common sense in business acquisitions (00:06:30) The panel discusses the importance of using common sense and avoiding emotional attachment when considering a business acquisition. Legal and financial considerations in business acquisitions (00:08:24) The panel discusses legal and financial considerations, including the importance of asset purchase, non-compete agreements, and the quality of real estate. Financing Considerations (00:18:13) Discussion on the critical role of financing in business acquisitions and the advantages of using banks or owner financing. Bank Relationships (00:19:09) Importance of building a relationship with a bank and leveraging the bank's confidence in the buyer's ability to expand. Financial Statement Analysis (00:20:27) Importance of thoroughly analyzing financial statements, including understanding expenses and discretionary non-recurring expenses. Negotiating the Deal (00:22:24) Strategies for negotiating the price and terms of the acquisition, including considering the concerns of the seller and assessing the facility's assets. On-Site Q&A (00:23:31) The checklist and tactics for conducting a site visit to assess a potential acquisition, including evaluating equipment, employees, and the owner's future plans. Pro Forma and Business Plan (00:25:23) The necessity of creating a pro forma and business plan for the bank, including the importance of conservative projections and understanding the return on investment. Challenges of Multi-Shop Expansion (00:30:34) Discussion on the challenges and missteps often encountered by individuals expanding into multi-shop operations, emphasizing the need for patience and learning from experiences. Gas Station Red Flags (00:32:41) The importance of environmental assessments.

Why stock, ETF, and bond trades are optimized to settle in less than a day, allowing investors quicker access to their cash and securities. What are the benefits and costs of optimization in the relentless drive for cheaper, faster, and more profitable.Why countries are moving to T+1 settlement from T+2 for security tradesWhat will it take for securHow BlackRock and Franklin have launched Treasury funds that are tokenized and trade on the Etherium networkHow optimization works and what are the tradeoffsHow we can use satisficing and rules of thumb in order to cope with the complexity of the worldSponsorsYahoo FinanceMonarch Money – Get an extended 30-day free trialOur Premium ProductsAsset CampMoney for the Rest of Us PlusShow NotesAbout the ‘T+1' Rule Making US Stocks Settle in a Day by Lydia Beyoud and Greg Ritchie—BloombergSEC Chair Gensler Statement on Upcoming Implementation of T+1 Settlement Cycle—SECWhat faster trading cycles will mean for US markets by Jennifer Hughes and Harriet Clarfelt—The Financial TimesSpeedier Wall Street Trades Are Putting Global Finance On Edge by Greg Ritchie—BloombergBlackRock closes in on crown of world's largest bitcoin fund by Will Schmitt and Brooke Masters—The Financial TimesKrumme, Coco. Optimal Illusions: The False Promise of Optimization . Penguin Publishing Group. Financial Statement Analysis with Large Language Models by Alex G. Kim, Maximilian Muhn, and Valeri V. Nikolaev—The University of ChicagoRelated Episodes457: AI's Fork in the Road: Societal Bliss or Existential Threat329: Meme Stocks, GameStop, Short Squeezes, and Bubbles228: How Tokenization Will Radically Change InvestingSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This is a recap of the top 10 posts on Hacker News on May 24th, 2024.This podcast was generated by wondercraft.ai(00:35): ICQ will stop working from June 26Original post: https://news.ycombinator.com/item?id=40467625&utm_source=wondercraft_ai(02:09): 2D Rigid Body Collision ResolutionOriginal post: https://news.ycombinator.com/item?id=40463764&utm_source=wondercraft_ai(03:31): Financial Statement Analysis with Large Language ModelsOriginal post: https://news.ycombinator.com/item?id=40468518&utm_source=wondercraft_ai(05:25): Writing a Unix clone in about a monthOriginal post: https://news.ycombinator.com/item?id=40467297&utm_source=wondercraft_ai(07:11): Voxel Displacement Renderer – Modernizing the Retro 3D AestheticOriginal post: https://news.ycombinator.com/item?id=40464558&utm_source=wondercraft_ai(08:47): Mp3tag – Universal Tag EditorOriginal post: https://news.ycombinator.com/item?id=40468933&utm_source=wondercraft_ai(10:22): Kabosu, the Dog Behind the 'Doge' Meme, Has DiedOriginal post: https://news.ycombinator.com/item?id=40464495&utm_source=wondercraft_ai(11:48): Google Search Is Now a Giant HallucinationOriginal post: https://news.ycombinator.com/item?id=40468230&utm_source=wondercraft_ai(13:31): Lewis Carroll – computing the day of the week for any given date (1887)Original post: https://news.ycombinator.com/item?id=40464303&utm_source=wondercraft_ai(15:09): Apple's M4 has reportedly adopted the ARMv9 architectureOriginal post: https://news.ycombinator.com/item?id=40465090&utm_source=wondercraft_aiThis is a third-party project, independent from HN and YC. Text and audio generated using AI, by wondercraft.ai. Create your own studio quality podcast with text as the only input in seconds at app.wondercraft.ai. Issues or feedback? We'd love to hear from you: team@wondercraft.ai

Financial Statement Analysis: Muhammed Daddabhay by Radio Islam

FTX had 80,000 transactions in Ask My Accountant; the crazy cost accounting behind EY's failed breakup; using ChatGPT for financial statement analysis; what the tech world thinks AI will automate in accounting and more!SponsorsLiveFlow - https://cloudaccountingpodcast.promo/liveflowChapters (00:00) - CAP 329 (00:39) - PREVIEW: How ChatGPT saved Erica (01:09) - Introduction (07:48) - FTX had 80,000 transactions in Ask My Accountant (12:04) - Blake plays a clip from the All-In podcast on AI accounting (17:25) - ChatGPT vs real accountants and students on tests (25:48) - Hector Garcia's example of using ChatGPT for analysing financial statements (31:24) - Is Erica using ChatGPT at all in her firm? (36:18) - EY breakup news (42:13) - Donna's voicemail on her sons college tour and accounting majors (48:18) - Deloitte kicks off program for high school students to earn accounting credits (49:29) - Can AI help save education? (52:48) - The IRS shows customer service improvements in 2023 (54:22) - Are accountants actually experiencing a better tax season? (01:01:49) - Crazy MYOB commercial (01:03:41) - Wrap up and where to reach everyone Need CPE? Subscribe to the Earmark Accounting Podcast: https://podcast.earmarkcpe.comGet CPE for listening to podcasts with Earmark CPE: https://earmarkcpeShow NotesBlake Oliver on Twitter: "My speaking session was selected for #Expensicon”https://twitter.com/BlakeTOliver/status/1649440639355097088 SURVEY: Busy Season Looking Good - CPA Trendlines         https://cpatrendlines.com/2023/04/10/survey-busy-season-looking-good/ EY Confronts Slowing Growth After Breakup Deal Fails - WSJ          https://www.wsj.com/articles/ey-confronts-slowing-growth-after-breakup-deal-fails-9442c85d Magic Workflow: AI-Powered Workflow and Process Generator   https://clienthub.app/blog/new-feature-magic-workflowai-powered-workflow-and-process-generator/ Ernst & Young has axed its plan for a split of its auditing and consulting arms, marking a dramatic and costly retreat                https://www.wsj.com/articles/ernst-young-halts-breakup-plan-bd2e2fa0Is that the IRS with your refund? No, it's a ChatGPT scamhttps://www.politico.com/newsletters/weekly-tax/2023/04/17/is-that-the-irs-with-your-refund-no-its-a-chatgpt-scam-00092169 Taylor Swift avoided $100 million FTX deal with securities question: lawyer https://www.businessinsider.com/taylor-swift-avoided-100-million-ftx-deal-with-securities-question-2023-4 ChatGPT less than 50% accurate in accounting exams, study finds https://www.accountancyage.com/2023/04/21/chatgpt-less-than-50-accurate-in-accounting-exams-study-finds/Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus, and NOW, you can see our smiling faces on Instagram! You can now call us and leave a voicemail, maybe we'll play it on the show. DIAL (202) 695-1040Need Accounting Conference Info? Check out our new website - accountingconferences.comLimited edition shirts, stickers, and other necessitiesTeePublic Store: http://cloudacctpod.link/merchSubscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Podchaser: http://cloudacctpod.link/podchaser Spotify: http://cloudacctpod.link/Spotify Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast YouTube: https://www.youtube.com/c/CloudAccountingPodcast ClassifiedsClient Hub - https://clienthub.app/RightTool for QuickBooks Online - https://righttool.appFuture Firm Accelerate - https://futurefirmaccelerate.com/capUncat - https://www.uncat.com/Nett Tracker - https://www.nett-tracker.com/Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the link below to get more info.Go here to create your classified ad: https://cloudacctpod.link/RunClassifiedAd The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

Most of the investing decisions we make as investors are based on facts and figures from the financial statements. How can we determine if a financial statement is reliable? What are the key figures that we need to pay attention to? What is the importance of reading the Auditors Report in a financial statement? On the Podcast this week, we chat with Mr Idris Ayinde (an Accounting Consultant and Manager with Ernst & Young UK) about all the above and much more. This episode is packed with nuggets every retail investor needs to improve their investing practice. Thanks for listening. Send your feedback and questions to valuenigeriawithajibola@yahoo.com --- Send in a voice message: https://anchor.fm/value-nigeria/message

Learn to analyse the financial statement of the company, get a deep understanding of balance sheet, cashflow statement and other financial elements. This course will give you a deep view of various financial ratios. https://quest.finology.in/courses/financial-statement-analysis

Tom welcomes John Roque back to the show. John is senior managing director and head of technical strategy for 22V Research. Gold is showing decent relative strength. We're in a commodity cycle since the Covid low of 2020. He is uncertain if gold will participate because of inflation or if it will outperform during periods of deflation. He wonders if gold is hindered because of a lack of investor interest. At an institutional level gold may not have the interest of fund managers. Those with good experiences in gold markets are few and far between in this era. John discusses his experiences with those that invest in gold over his career. The Fed balance sheet is at unprecedented heights and we see speculation across all asset classes. Gold remains restricted with many investors tired of looking at it. For this reason, gold may be a good contrarian play. Crypto is an easy asset to acquire in this era and many believe that it only goes up. He discusses some of the controversial players in the Bitcoin space including MicroStrategy and El Salvador. Gold might be starting to outperform and it carries a lot less risk. He discusses how ESG mandates are pushing more investors toward technology and this has caused issues with capital in other sectors like energy and resources. The only way investors will embrace other sectors is when tech fails to participate. No one is prepared for tech to underperform. He doesn't believe the Fed was evaluating the CPI number properly. They seem to have overlooked the data. Historically, CPI can get quite non-transitory for extended periods. The PPI shows that the S&P often has problems when inflation gets high. Inflation will likely be even higher by the end of the year. John expects the Fed will closely watch the S&P and do their best to keep it propped up. If it comes under pressure their confidence to taper will falter. The concentration occurring in the S&P is quite concerning and there is plenty of room for investors to get hurt. Time Stamp References:0:00 - Introduction1:30 - Recent Article2:40 - Gold Therapy11:35 - Contrarian Views13:06 - Crypto Vs. Gold15:29 - P.E. Conditions18:20 - Brobdingnagian21:21 - Commodity ETFs24:50 - Not Growth Ratio28:12 - S&P & Energy29:55 - Fed CPI Metrics34:56 - S&P and the Fed38:47 - Stock Concentration42:43 - Scoring Equity Mkts45:52 - Wrap Up Talking Points From This Episode Gold's performance and the lack of institutional investor interest.Risks with crypto and the belief that numbers always go up.Fed's inflation targeting and its failure to recognize where inflation was heading.Why the Fed won't allow the S&P to falter. Guest Links:Website: https://22vresearch.comFree Article: https://22vresearch.com/2022/01/19/sleeping-giant-awakens/ John Roque is Senior Managing Director, Head of Technical Strategy for 22V Research. John's worked on Wall Street since 1987 with his research background beginning in 1990. From 1990–1994, Mr. Roque worked at Safian Investment Research and then from 1994–1998 at Lehman Brothers, where he partnered with long-time technician Steve Shobin. He was at Arnhold & S. Bleichroeder (and its incarnations) from 1998–2009 and then a short stint at WJB Capital through 2011. From 2012 to 2015 Mr. Roque worked on the buy-side at Soros Fund Management and then from 2016–2018 at Key Square Capital Management. He returned to the sell-side in April 2019 at Wolfe Research before joining 22V. Mr. Roque was a ranked Technical Analyst in the Institutional Investor Magazine's Research Poll from 2009–2011. He received both his BA with Honors in Economics and his MBA with Honors in Financial Statement Analysis, International Trade & Development, and International Economics from Fordham University. Mr. Roque lives with his family in Mount Vernon, NY.

Learn to analyse the financial statement of the company, get a deep understanding of balance sheet, cashflow statement and other financial elements. This course will give you a deep view of various financial ratios.

Learn to analyse the financial statement of the company, get a deep understanding of balance sheet, cashflow statement and other financial elements. This course will give you a deep view of various financial ratios.

Join the discussion on Facebook!TranscriptJonathan:Hey guys. This is the third episode in the series. If you've not listened to the first two episodes, make sure you go back in time to check those out first. It should be in the title of the episode which part in the series it is, so make sure you go back and check those out so that you have a full understanding of what it is we're talking about today. I just want to jump in here real quick and let you know that. We'll see you next time.Jonathan:Welcome to the Tooth and Coin Podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now, a very important piece for you to understand is that this is not paid financial advice, this is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. We've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today. To continue the discussion, agree with us, don't agree with us, have a story to tell, have something to share, join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin Podcast, click on it to join it and be able to join us there. Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion to be able to help you a little bit more than what the content is doing.Jonathan:So if you'd like access to that, whenever it becomes ready, all you have to do is text the word tooth and coin, T-O-O-T-H-A-N-D-C-O-I-N, to 33444. Again, that's tooth and coin, all one word, no spaces, to 33444. Reply with your email address and we'll email you instructions on how to get into a Facebook group, as well as add you to lists to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you, as well. On to today's episode. I hope you enjoy it.Jonathan:So we give that number to our clients every month. Here's what your breakeven point is so that they can have the context of, Well, I want to make $30,000, my break even point is $45,000. I've got to be producing $75,000, right now my average is $55,000. I got a lot of work to do. They know they got to influence it. They're not going to be surprised when they don't have $30,000 at the end of the month. They're going to know what that is. So, what about you in terms of breakeven point, things like that, what are some of the things that you like to use a breakeven point in order to be able to use in terms of management and goal setting and things that.Joseph:So I think it's probably important that we talk about the things that go into that break even point. It is a few additions to the calculator and a subtraction. When we look at a break even point, what was all of the costs involved from your P and L for the month? What was your total cost to operate? Then we're going to add back those owner's discretionary expenses, like the owner's wages. We're going to add that back. We're going to add back depreciation and amortization because those are paper entries that go on. And then we're also going to subtract out and say how much were your principal payments on your debt to get to your break even point. Those breakeven points, I find that to be most useful in determining how much cash you need to keep in practice.Jonathan:Mm-hmm (affirmative).Joseph:If I'm looking at a client that has a breakeven point of a $100,000 and they have $700,000 in their business checking account, I'd say you've probably got a little bit too much cash in your practice, it's not working for you. What you do with that cash, there's a lot of things, call your financial advisor and talk to them about that. But, if we've got a client that has a $100,000 breakeven point and their cash in the bank is $50,000, it's Look, we probably should slow down this owner's withdrawals. We probably should slow down all these different things. We need to get the cash to a point where you can sleep well at night, that you've got the liquidity to be able to operate.Joseph:And when we look at that ratio, your breakeven point to the cash in the bank, again, it's very similar to what we were talking about with the balance sheet and looking at their current assets divided by current liabilities. It's not the same exact number, but it's the same concept, how many weeks worth of cash that you have to operate. So if the spicket of income gets turned off today, how long can you operate? Can you operate for a month?Jonathan:Mm-hmm (affirmative).Jonathan:Can you operate for a week? Can you operate for six months, eight months, 10 months, 12 months? So those are the things that I like to talk to practice owners about. And we get the question all the time, how much cash do we keep in the practice checking account? And a lot of that has to do with the comfort level of the practice owner.Jonathan:There are some practice owners that want to empty the checking account out every month and take all that money home. There's some practice owners that say, Hey, I really want to make sure that I keep a $100,000 or $150,000 or $50,000. That number is different, that level of cash and comfort is different for everybody. The thing that I like about the breakeven point is it takes the emotion out of it and it just says, Here's how much it costs to operate your practice, period.Jonathan:Mm-hmm (affirmative).Joseph:Now we can figure out what you want to keep cash wise on hand with that.Jonathan:Completely agree. Honestly, I think that's probably one of the biggest comfort levels you can get as a business owner is to reach that cash goal. Because once you've hit that point, at that point, you can just optimize because and really work towards those goals. I really like using the breakeven point as a goal standard, too. Let's say that I have a personal income goal of $40,000 a month. We'll our average breakeven point is $50,000 a month. Again, we give our break even point to our clients each month. We also give a rolling quarterly average as well as we give a year to date average so that people can understand really kind of how's that breakeven point trending, where's my average, like what is the number that it looks like, so you can have a bit of normalization to that number as well.Jonathan:You have a little bit of a, of a plus or minus on there. Let's say a $50,000 breakeven point's the number that you've been averaging, a fairly consistent number, because obviously things go come up and down. Things will happen that create one time expenses. But, knowing that breakeven point by heart, knowing it's $50,000, if I want to make $40,000, then I know I got to be at $90,000 a month in collections. I know that has to happen. And if I know that we're going to be open 18 days out of the month, the quick math is `that's $5,000 a day.Jonathan:Let's see, $9,000 divided 18, $5,000 a day, yes. My almost a minor in math still works. So, $5,000 a day is what you got to get to in order to be able to hit $9,000 in collections. And all of a sudden, a number quantitative number that we can use in terms of the inside of the practice to quantify what it is we need to be bringing in. And we were to be able to set some type of a standard. If I know right now we're averaging $4,200 a day, I know that number has to change. I have to get an extra a hundred dollars a day in there. If I have that $5,000 a day number in my head, what I would tell people to do is break it into two segments. Break that into hygiene and break the into doctor production collection.Jonathan:Hygiene is usually a little bit easier for people to calculate on because it seems to be pretty standard. Over time, there's a normalization of hygiene revenue it seems like because there's just not a whole lot of extra services that get added into hygiene. You have a prophy and you have x-rays and you have, fluoride, maybe you have some perio treatment or something like that, if your practice is doing that. And, but overall, that revenue is fairly consistent from a hygiene perspective. So, let's say that you got two people there everyday doing hygiene, and you know that your hygiene's going to be somewhere around $1,800 a day in collections coming from your hygiene department. Every practice is going to be a little bit different, but what they do or don't do it in this terms of those numbers.Jonathan:So that gives you $1,800 a day, $900 a hygienist, goal. And it gives you a $3,200 doctor production in a day. And so that allows you to then say, Okay, if my goal is $3,200 in a day, what does that look like in terms of what I am commonly doing in terms of production? Is that two crowns a day, plus some exams and plus other things? What is that number, to you, as a dentist, as a practice? And there's that one new ortho case a day? What is that number? And that gives you a lot of power to set some type of a goal. And once you have those goals set, you can then bring your team in. And again, this is the reason to circle back to the part about having good staff is you want to have a team to be able to help you reach those different production roles.Jonathan:And that's where you start the training, you can start working on those different things. And I think it's a good starting point for allowing you to be able to come up with what you need to do in terms of what the production does. And again, that's just one use of the breakeven point. If I was a business owner, I would always know my breakeven point. Well, I say that, I am a business owner, I do know my breakeven point.Jonathan:But, for all my clients, I urge you to understand your breakeven point because there's a lot of power in that number from in a bunch of different aspects. I wish the breakeven point was just a standard financial statement number. But even though it's really important, to me, it's probably the most powerful number that you get from your financial statements, just not on your financial statement. It's not there. You have to calculate, you have to know what you're looking for in order to be able to look for it. So, to me, the breakeven points of like a magic number almost that everyone should know. So, that's the breaking point. Is there anything else on the P and L that you want to talk about because that went pretty in-depth on the P and L.Joseph:I like to look for trends, I like to see if things look out of whack, I like to look at measures of our percentages over time. I think that those are going to help tell the story as your practice grows or as your practice shrinks. It may be one of those things that you grew too fast, you have too much stuff going on, too much expenses, you hired a couple of associates and you're Man, I need to go back to just being a single practice owner. Those percentages will help you understand kind of what the story is and evens things out over time. So, those are the big things that I'm looking at, for sure.Jonathan:Yeah, same here. So let's move on to the last one. And Joseph and I talked about this financial statement before the call, and I said, You'd probably be surprised by my answer or this one. The last one was the statement of cash flow. And in terms of the statement of cashflow, what is it that you're looking for when you're analyzing the statement of cashflow?Joseph:So, the beginning number of the statement of cash flows is what was your cash in the bank, minus your credit cards, at the beginning of the month. The bottom number on the cash flows is what is that number at the end of the month? The statement of cash flows tells you how you got from your beginning balance to your ending balance. So, there are a couple of different things that go into how we got from A to B. The simplest, easiest way, and I'm not going to use the accounting technical term is number one is what was the profit? What was the net profit of business? And then we're going to add back non-cash expenses, depreciation, amortization, add those things back. And then we're going to subtract out, did we buy any assets this month, cash assets?Joseph:And then we're going to also subtract out and we're going to say, How much did we pay in principal payments our debt? So,, how do we get in cash in the bank from X to Y? So when I'm looking at the statement of cash flows...Also, how much did we take out owner's distributions? That's another pretty key component. When I'm looking at the statement of cash flows, first thing I'm looking for is Did the cash go up or down over the period? And then the next question is Why? As I'm looking at that, and then I also look at that ending cash balance and I'm looking at that breakeven point and seeing whether or not we're in good shape or not. If the ending cash balance is still seven times your breakeven point, it doesn't matter that cash went down $10,000, $5,000, whatever it is.Joseph:That's not a statement of alarm. I also am looking at the cashflow statement because we have a lot of owners that are saying, Hey, look, I'm not paying myself a salary. I'm a schedule C filer. How much can I afford to pay myself? And that's one of the first places that I go and kind of direct them at is to say, Well, let's look at your cashflow statement. Let's see how much cash was produced in the practice last month versus how much came out, let's look at that. I like to look at whether the cash increased or decreased and why and then I try to figure out how much was taken out in owner's distributions and was it enough or too much or that kind of thing in order to figure out where the cash balance is compared to the breakeven point.Joseph:So, those are some of the things that I'm looking for. If cash went down by $10,000, but that's because we paid off our line of credit, that's not a bad thing. If cash went up a $100,000 and it's because we took out a 50% interest, hard lender that's a bad thing. So, how did we get from cash in the bank at the beginning to the end and what makes up all of those different pieces? Obviously, loans are a big part of practice ownership, but if you're taking out a loan in that kind of a way where you're just desperate for cash and you've got to take it out at a really, really high interest rate, that's not something to celebrate because your cash went up because you took out a cash advance on your credit card.Joseph:That's not a good thing. So, cash at the beginning, cash at the end. And then how do we get there? What are those kind of bigger key components? Hopefully you run a net profit for the month, hopefully you took out some sort of an owner's distribution. You probably had some sort of a payment on your line of credit and you may or may not have bought a new asset inside the practice. So, those are like the high level things that I'm looking at. And just to make sure that it makes sense over time. And then comparing that to back to your breakeven point and why it's so important, comparing that back to your breakeven point and seeing what the cash looks like. How about for you? What are you looking for in a statement of cash flows?Jonathan:The first thing that I look at statement of cash flows again, if it's internally prepared by our firm, then I'm actually looking at it. If it's externally prepared, I usually just throw it in the trash because I know it's probably not going to be prepared well. Statement of cash flows is one of the most complicated financial statements to create, for some reason. I think that the reason is because most bookkeepers and most CPAs do not have any need for a statement of cashflow whatsoever, ever, when they're preparing a tax return. You do not need one for a tax return, at all. And so I think that most people just ignore it, they basically just hit the print button on their financial statements and statement of cashflow pops out and they give it to the people and they get along with it.Jonathan:I think that's what the standard is for most statement of cash flows. If it's internally prepared, I know it will be done well, I know that with the software that we use, the way we have it set up, it's going to give us what we need. If I'm looking at a statement of cashflow, like you said, the way the statement of cashflow is set up is a three prong approach as grouped beginning balance, plus or minus operating expenses plus or minus investing activities, plus or minus financing activities and the end is what your cash balance is going to be and there's going to be a delta between the beginning and the end to see where that money went to. If you don't normalize that, that number is going to be worthless, it's not going to make any difference at all, because you may as well have just looked at your bank statement because your bank statement has at the beginning of the month, how much cash is in there, has the deposits, has the expense, and it has an ending balance. Bank statement says the same exact thing. But in the statement of cashflow, it groups things into logical ways to be able to tell what's going on. Yes, the times when I would look at the statement of cashflow, or whenever I'm looking at a year end analysis to say... If I have client saying What happened to my cash? Statement of cashflow is where you typically tell them where the cash went to. You do a rolling number of showing them, Okay, well, beginning of the year you had this much cash you got this much in loans, you pay this much loans back, you took it out this much in extra whatever, and distributions, here's what you paid yourself and here's where your cash went to and that's the rolling number.Jonathan:That's the standard for small CPA firms or when you have small business clients, you have to do that almost every year for most clients, whenever you're a small CPA firm. For us, we don't do that because we do that every month. We do it in a customized way to show people three things. Number one is cash profit. Number two is what your cash profit versus your tax profit is. So, your cash profit is not what ends up on your statement of cash flow but we use that number to help us calculate what the cash profit is. We have to do those add backs, just like we did with the normalization of the income statement. And by the way, this is probably episode 12 now for the time of the cashflow. You have to normalize that to be able to say what happened to your money.Jonathan:I skipped over the third one which is what is your tax profit versus your cash profit? Because those two numbers are very different. And people get those really confused. We talked about on the financial statements, what's at the bottom doesn't make a whole lot of difference because it could be that the owner paid themselves something or another. Cash profits, the same thing. Your cash profit is not going to be anywhere on your financial statements, you got to calculate it in order for it to be reality. And you've got to normalize that cash profit. You find out what your cash profit is so you know how your business is doing, your tax profits really just there so you can kind of understand how much you've made from the IRS's eyes. So you kind of have an idea of what we will be paying taxes on at the end of the year.Jonathan:That's really the only use for the tax profit number. So, we use the cash profit for that purpose, which is derived from a bunch of different metrics inside of the statement of cashflow. We do utilize it because we also have things like the financing activities is the paying of the debt down and things like that. And they always get, even I get them confused. I don't remember the rules because the software does it for us all the time now. I think technically when you take out debt, it's an investing activity, but to repay it back to financing activity or something like that. Or maybe it's the assets go into the investing and then... It gets real complicated, real fast.Jonathan:There's a real reason why we don't look at it again because we never use it. The only time I'll ever use it is when I'm helping someone to understand what happened to their cash. And then you go in and if it's a well done set of financials, those numbers will roll the right way. If there's a bunch of journal entries done to dodo accounting every month, which is what a lot of firms do, the cashflow statement will not work because the journal entries will not be reflected appropriately inside of the table cashflow almost ever. So to answer the question again, the three things I look at is what is the actual cash profit and then what is the delta of cash? And then what does that versus tax profit?Jonathan:Those are the things that I look at a statement. They're not technically on the statement of cashflow, but that's what I look for when I'm using a statement of cashflow, in the grand picture of things. I think I had a client asked me, actually asked me this one time of, What's the standard that should be going into my investing activities inside of the statement of cashflow? Because they were really studious and they heard about statement of cashflow and they'd read some type of book that had said that there was a really important number that nobody talks about or whatever it is. There is no standard for that. In a small service-based business, it's very much what you're doing, not versus what other people are doing.Jonathan:And the ways and means that you get to those things, that isn't something you can normalize. I've used the term normalized too many times. It's not something that you can aggregate and then make an average of and have it be a meaningful number for anyone, I don't believe. Because there's so many different variables that go into it in such as what type of practice it is, what type of patients you have, how old is your practice, what's your production capabilities as a dentist. There's just so many different things that go into that, that it's a fool's errand to try and figure out is my investing activities, I'm assuming cashflow, optimal comparatively to the other practices that are out there, does doesn't exist. And help us, please, if there is a study out there that says that there's some averages that you should be looking at in dental practices, because I can only imagine what type of data they have. That, to me, is the statement of cashflow. So is there anything else that you wanted to add for that topic?Joseph:Back to that question that I got when I sat down and interviewed for a finance job. The guys told me his favorite financial statement was the cashflow statement and he was a private equity investor, so basically he wanted to know how much cash he could skim out of the business... Not skim out of the business, but he could strip out of the business -Jonathan:Sure.Joseph:In owner's distributions every single month. So, the cashflow statement told him everything he needed to know. Did they make a profit or not, add back depreciation, amortization? What were the loan paybacks? And then that's the cash I can then take out because that was the net change in cash over the point in time. I always struggled with cashflow statement whenever I was coming up through the ranks in CPA land and in accounting land. Balance sheet income statement always made the most sense, but I always got confused. You're talking about this financing versus investing. At the end of the day, the cashflow statement is trying to tell you, where does your cash go?Jonathan:Mm-hmm (affirmative).Joseph:Did it go up or down and why.Jonathan:Yep.Joseph:That's what you need to glean off your financial statement of cash flows.Jonathan:Yep, absolutely. And it's there, you just got to know how to read it. And that's another reason why tell dentists to not spend them a lot of time on that because context is so important. And if you don't fully understand the full set of financials in your industry specifically, you really just can't read a book to tell you how to read a statement of cashflow. It's not going to bear fruit. So to me, hopefully you got good advice and people are painting a picture for you rather than you having to know all the ins and outs of the different elements of financial analysis to be able to divine how these numbers are doing. Those are the financial statements.Jonathan:WE've touched over things, believe it or not. Even though we've talked a lot about the financial statements, we've just touched over the things. There's a lot more nuance that goes into the creation of these things. And, it's almost an art, in a way, of the start to finish creation of them and setting them up in a way in which can be analyzed appropriately. And that was something that I struggled with really heavily on when we started our firm was I wanted to teach everyone how to read their financials. That was my goal in life because I was Man, I want to teach them how to be... they're going to, they're going to be putting people at Goldman Sachs to shame because they're going to be able to know how to read the financials.Jonathan:And I quickly realized that there's no reason to do that. Just tell them what they need, show them what they need. And so what we do in our firm is we definitely take those financials and we paint a tapestry of the important numbers. A good set of financials can be six to seven pages along of data per period. And if you do that over a course of a year, you got a hundred some odd pages of data. What we do for our clients every month is we set up all that information by a single page report that lets people understand really well The answer to four questions, which is how profitable are we? How well did we spend our money? How much cash should we make? And where did that cash go to?Jonathan:But that's our goals with our financial analysis to give to our clients every month. And then we help people, if they don't understand what the numbers say, we teach them, we tell them how to read it and show them what happens. And then if they have any questions about the results, they ask us and we can give them our input from viewing that over 250 times a month. That's the way that we've approached this challenge and approached the problem of that there's not a whole lot of education out there about what are on the financial statements. And I'll be honest. I don't really think that there's, I don't know... I'm torn on this one at this point because my thinking has evolved so much over the past 10 years. Would you spend time if you a dentist going and taking a course, a three hour college course about how to analyze financial statements?Joseph:I wouldn't. I don't think it'd be a good use of your time. I think that if you've got a good CPA or a good accountant that can help you understand your financial statements then you can see what's going on month to month and tell you everything you need to know. I think a three hour course... Because it's not going to be relevant. The same metrics that they're going to teach in that they're going to talk about some of these higher level concepts, like the debt to income ratio or the assets to liabilities, or the current ratio. They're going to talk about a couple of those things. They're not going to say, Here's what your supplies and labs need to be each month. They're going to say, Well, this is a typical in your industry how much your overhead should be. If we're a construction business, we've got more going on materials than you do in a dental, right?Jonathan:And then there's also the different the cost to completion method or, what's the other one? There's another construction one. I can't remember it off the top of my head.Joseph:I mean, if you really want to learn this at a high level, go figure out your favorite publicly traded corporation, go figure out when their earnings call is, look at their financial statements and listen to the executives talk about what's going on inside of those businesses. I think that would be a lot better use of your time. If you really love Apple computers, figure out when Apple's earnings call is and go sit on their earnings call or listen to a replay of it and have them walk you through their financial statements. You get a lot more out of that because it's a business that you know and understand. Or any of these publicly traded companies that are in the dental space. They'll talk to you about what's going on in the industry. Those would be a lot better use of your time than taking a college class.Jonathan:I agree. And the other thing that's really important, closing thoughts, is that the financial statements, they tell you what happened from a financial perspective, they don't tell you everything about your business. Like I told you at the beginning of the conversation that there's people out there that thinks that the financials have everything in there and they don't. Like I said, they don't show you a measure of capacity. They don't show you new patient inflows. They don't show you your production per day. They don't show you your open chair time. They don't show you how many patients are coming in, being rescheduled for your hygiene every month or every day. Those are important numbers to know if you're a practice owner, but they're not on your financials. And no amount of financial analysis is going to give you any of those numbers unless you bridge the gap between practice management and financial numbers.Jonathan:And what we tell people is that we are CPAs. And I know there's a lot of blurring of the lines of what CPAs do and don't do, but for us, we're CPAs. We handle financial analysis and we help you with financial analysis. Practice management analysis should be done by practice management consultants. We are not practice management consultants. I know that there's a lot of blurring of the lines in the dental industry for what is a practice management consultant or not. And, yeah, we know a lot about the numbers, but I don't know your hygienist, I don't know your office manager. I don't know your management style. I don't know what type of patients you have every day. I don't know how you like to turn patients over. I don't know how you like to have your tools set up and how efficient that makes your assistant.Jonathan:I'm not going to tell you how to do those things. I've never been a dentist before. I can tell you how to be a leader and things like that, but I'm not going to be able to give you that practice management information. And so to me, in terms of the best financial advice I can give someone is to pay a practice management consultant for that time that you're spending, because you were paying a CPA, you're paying $200, $300, $400, $500 an hour for this advice. And if you have a CPA doing this for you, more than likely, all they're going to find is problems. Probably not going to have any solutions, probably it's going to be problems are going to find. So rather than paying them somewhere between $200, $500 an hour for someone to find problems, pay a practice management consultant between $100 and $200 an hour to find the problems and give you the solutions. Much better use of your money, so to speak.Jonathan:So financial numbers can help you look for areas of focus, but they're not going to be giving you hard, cold facts that this is optimal performance. That's not how financials work, unfortunately. That's a big misconception, too. And I think there's a lot of people out there that they get into this game because business is a game in a way. And they think that If I optimize the financials, I'm going to win this game. And it's not the financials. It's really the people that you got to optimize. It's really the performance that you got to... Practice management. It's a different game, it's a different thing. I want to make sure that I'm putting that out there that financial analysis does one thing, practice analysis, practice management analysis does a whole nother thing. It's a whole other ball game. Any other closing thoughts you have, Joseph?Joseph:Well said, Jonathan. And ditto those things that you said. Financial statements can tell the story, but they don't tell the whole story. They can give you a glimpse of where you're at and where you've been. That's the other thing about financial statements is they're always going to be backwards looking. I had this conversation with one of our clients a couple of weeks ago. Inherently, they are talking about what happened in the past. It doesn't tell you what's going on in your practice today, what's on the schedule for next week. Those are not going to come out of your financials. They're always going to be backwards looking. So the challenge is to marry the two. Come up with what your goals are, figure out what you did in the past and figure out what your future needs to look like to get to the place you want to get to. And I think that's where the beauty is.Jonathan:Exactly. I agree. It's been a fun set of episodes. Hopefully you've gotten a lot of value out of this, listeners. If you have any questions about this, obviously, we talked about this too much already to our loved ones, and they don't want to hear about it. So if you want to come over to the Facebook group and chat about financial statement analysis, we'll be there and talking about it. Maybe if you had some type of a really interesting number you found in your practice or you've had a way that you've been able to affect your numbers we'd love to have you over in the group and be able to hear about it. Or if you have any questions about what your numbers mean, we can maybe give you some context around that in terms from a financial analysis perspective. We appreciate you listening in. Hope you've had fun and we will see you next time.Joseph:Bye, guys.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're requiring, about to be an owner of a practice they are starting up or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoy today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the longterm. Lastly, if you want access to those resources that we are currently building, just text the word Tooth and Coin to 33444. That's tooth and coin, no spaces. T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions to the Facebook group. We'll send you the resources when they're available and we will see you next week.

Join the discussion on Facebook!TranscriptJonathan:Hey everybody, Jonathan checking in here. And just so you know, this is a second part of the episode. So if you've not listened to the first part yet, you want to go back and listen to it in the prior weeks. We should have it labeled on the episode title what part one is and part two is. So you should be able to see that in the title of the episode it is what episode of episode it is. So thanks.Jonathan:Welcome to the Tooth And Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now, a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share? Join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it, and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Again, that's toothandcoin, all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group. As well as add you to a list to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well.Jonathan:So onto today's episode, hope you enjoy it.Jonathan:We work with around 250 offices, and we see there are just differences in dental practices. So a P&L, to me, is a fantastic thing to look at to have an understanding what's happening. But to me, you have to be financially savvy enough to calculate out that seller's discretionary earnings in order to be able to calculate what the actual profitability of this practice is on a dollars and cents perspective. Once that is done, you would then look at those different key categories, which again is another area where I find a lot of dental practices financials don't have things properly segmented inside of their financials. So you can't do that. So the presentation of the P&L for dental practices is just as important as the understanding. Because you and I could look at a financial statement that would come to us, and if it's not a really, really well-defined P&L.Jonathan:I mean, we've seen P&Ls that came through that had 10 expenses on it, and that's all the expenses on the P&L. They have nothing else. And it's just like-Joseph:Wages.Jonathan:Yeah, wages. Like payroll taxes-Joseph:Supplies.Jonathan:[crosstalk 00:03:36] that. Insurance is on that. They have a consultant, probably, in wages. They probably did some recruitment, that was in wages. And it's just all in one big pile, one big line item. And you can't define anything out of that. So presentation is just as important as well. So what about you? What are some other things you like to look at on the P&L? Because I could probably talk about this for another two hours.Joseph:Yeah, no. I like to look at the owner's discretionary expenses and really make sure that you're able to do that. Anytime that you're ever going to buy or sell, it's in everyone's best interest to do what's called normalize the financial statements, which is what Jonathan just described there. Which is like all of this stuff that the owners run through that are ordinary necessary business expenses, if somebody else came and bought the practice out, a PE firm or a bigger company comes out, or DSO, whatever, comes in and buys, they're not going to spend $18,000 on the travel to take you to eight CEs across the country. Right? They're going to come up with probably a more cost-effective way to do that. So I like looking at the owner's discretionary expenses.Joseph:I like looking at labor, and seeing how much are we spending on labor? One of the calculations that we make for our clients each month is: what percentage of your money are you spending on clinical staff, hygiene staff, and clerical staff, divided by your top line revenue? And one of the things that we try to get inside the benchmark of the industry. And if they're significantly outside of that benchmark, like in a bad way, if we want that number to be, let's say, 25%, and that number's at 35%, then that tells us that that's something that we need to dig into.Joseph:Now, some people might just say immediately, "Oh, that just means we need to cut salaries and cut staff by 25%," but then if we just kind of look at the top line and we're like, "Well, the practice only collected like $20,000 this month," it sounds like it's probably more of a collections problem and a top line revenue problem than a production problem, and maybe an AR problem, versus spending too much in wages. So I like to look at that. I think that when you look at your people, and we've talked a lot about leadership inside this podcast, the people that are inside your practice that are helping you make this thing go certainly are a big, huge asset to you. They officially go on the P&L. But I want to make sure that we can it back and challenge the staff and say, "Hey, look, we need to grow the practice in order to justify the money that we're spending on all of the people that are here." That's something that I look at.Joseph:I like to look at supplies and labs and figure out if that's kind of something that's significantly out of whack. If you got $20,000 in collections but you're spending $25,000 a month in labs, anybody could tell you that's a problem. Right? So I look at supplies. Like to look at labs, like to look at wages. And then I'm just kind of looking for like any crazy stuff that sticks out, any kind of big pieces. Like going back to the comparative piece that we were talking about with the balance sheet, I like to look at a P&L and I like to look at this month versus the past three months or four months or five months, so I can see if I can note any trends. And then if all of a sudden I see an $8,000 expense that pops into an expense category, that may be something we need to look at. Like, "What's going on here?"Joseph:It's like, "Oh. Well, I had to replace the roof," or, "I had to replace the AC," or, "I had a piece of equipment that I bought," well, maybe that doesn't need to be on the P&L, maybe that needs to be on the balance sheet. Maybe we've got kind of a bigger problem here if we see huge, huge increases. And the technical term that we call it in the accounting world is that we're going to do an analytical review. We're going to analyze, we're going to look at what all has happened. So those are some of the things that I'm looking at when I'm looking at a P&L. I'm looking at wages as a percentage of revenue, like all the money that you're spending. So obviously that's going to include whatever your 401(k) matches, whatever your health insurance is you're paying on behalf, your payroll taxes. All of that goes into paying for your people.Joseph:I'm going to divide that by the top line revenue and see what that number looks like. And that's one of the reasons that it's important. You were mentioned in the 10 line income statements we've seen, that's why it's important that wages need to be separated out. It's like, "What do you mean you put your doctor's wages in with your doctor's family and with your hygiene staff, and that means that our wages are now 290 ... Well, of course they're out of whack. Right? Because we need to separate those things out to determine whether or not we're spending our money wisely on our staff."Jonathan:Yeah. Completely agree. I was having a conversation with someone on a podcast years ago, and they were like, "Well, taxes are your number one expense as a business owner." And that's a line that has been fed to so many people. I think probably even I heard that in tax class when I was taking a tax one and two in college, or whatever. But in dental practices, that's not the case. Taxes are not your ... Now, if you add up all the different types of taxes, they were talking about income taxes. That's the narrative we're usually give them around that. Your staff is your number one cost.Jonathan:It's your number one investment is a way I'd love to be able to rephrase that, and be able to ... the paradigm change of a practice, because if you're spending 25 cents out of every dollar that comes in the practice, up to 35 cents out of every dollar that comes into the practice, on your people, then your practice that nets, let's say, 40%. And if you're paying 40% in taxes on 40% of what's left over, you're only paying 16% in taxes, 16 cents per dollar, for your staff, for your income taxes. Whereas you're paying 25 to 35 cents per dollar for your staff. Big difference, right? So your people are your big difference. And that's a good thing. You want to pay people to do good work for you. I've definitely ran into CPAs or to clients that have had CPAs in the past that have said that, "Oh yeah, you're overpaying your people by this much money. And this is how you're going to get your payroll in line, is you're going to clean house and lower everyone's wages by this amount."Jonathan:And it just kind of makes me sick that ... that can wreck the practice if it's not done really, really well. I will say it is possible to have an overpaying problem, to pay people a whole lot more money. But to me, and we use this concept in our firm, I would rather overpay for good people and have my life be easier than have to worry about the $1,500 a year that I'd be saving if I was trying to not be competitive with my wages. This is a pretty bold statement, but I would think that, as a dental practice owner, you should be wanting to be the highest paying person in your area for doing a good job. Because you want the best people. You don't want the worst people. The best people can raise you up really, really high. And so staffing costs definitely look at. But from a percentage-base, from an analytical standpoint, yeah, we got to have some type of understanding of how to reign in these numbers on our staff, to be able to give some type of context on how we're doing, how well we are spending our money.Jonathan:And that's what we say we're answering the question of whenever we do an analysis of overhead every month for our clients is, it's literally the question that this information comes in. We have a four questions report, and one of the questions is, "How well did you spend your money?" And we have an overhead analysis that gives you percentages of these things. So definitely staff definitely supplies, definitely labs. But another thing that I really like to look at, after I've looked at profitability and I've looked at the balance sheet and everything like that, is I like to look at growth expenses. What are we reinvesting in? What is going to happen in this practice? And are we seeing growth off of those said expenses? We've got a lot of clients that have 0% of fees or their revenue goes to growth expenses.Jonathan:Nothing. They don't spend anything on advertising. They don't spend anything on consultants. They don't spend anything on big new courses or things that they were trying to learn, anything like that, but they're still growing. And then we have people that will spend 15 to 20% of every dollar that comes in on these things, and they're not growing at all. So effectiveness of growth expenses is a very important number that I like to look at just when I'm trying to say ... Because that's a very quick thing for me to be able to tell our clients, like, "Look, your growth expenses are really, really high, and we're not seeing any revenue growth. Is this an effective use of our spent? Of our money? Because I love that you're willing to invest in the growth of your practice, that's what you're supposed to do as a business owner, but is this the most effective use of that money?" And for-Joseph:[crosstalk 00:12:11].Jonathan:Exactly. So for dentists that can be a really big deal. That's a really, really, really big deal, is effective use of advertising spend, or growth spend, consulting or whatever it may be. And that's something that gets lost a lot whenever you analyze financial statements too much is, what is our ROI? I don't go into such fine detail of saying, "We need to know the cost per lead of everything that happens from every single campaign," or anything like that. I just hope that you've hired someone that's smart to do your advertising that does that for you. And then you can validate those things down the road. I don't think that you should be spending 30 man hours a week trying to figure out just how effective those lead funnels were or anything like that.Jonathan:So from the P&L, those are the big things. Obviously we back out interest, appreciation, amortization, and things like that when we do the normalization and seller's discretionary earnings. I don't put a whole lot of weight into looking at interest, depreciation, and amortization. I'm never going to look at an interest ratio or anything like that for a dental practice. I don't think it's really very fruitful of an endeavor. I might very briefly see like, "Oh, there's $30,000 on interest. This person has a lot of debt." But if I looked at the balance sheet I've already noticed that. So if I'm looking at, "Is this a well ... This is a good set of financials," if I see that $30,000 in interest and I see no debt on the balance sheet, then that makes me just roll my eyes and throw the things in the trash, because I know that it's probably not a good financial statement.Joseph:Not good financials. Yeah.Jonathan:Or interest is [inaudible 00:13:43]. What else have I seen? I've seen credit card fees be put to interest expense. I've seen ... there's just so many things you see get stuck in there. So anyway. Yeah, to me that's what the P&L's for, is show, number one, it has to be well put together just like the balance sheet, just like statement and cashflow, or else it's almost worthless. You're looking at revenue. And then also comparatives. Again, we look at ... Whereas the balance sheet is a snapshot of time, a P&L is a story over a period of time. So whenever you're looking at the stories you have to compare a period over a period to be able to tell that. So in terms of that, of how to use comparatives inside of P&Ls, how do you look at versus the past?Joseph:Yeah, so one of the things we were talking about with the balance sheet is getting a chance to look at some different ratios, right? So we talked about like the current ratio, current assets divided by current liabilities, and how we need to basically figure out a way to create a level playing field. So if your practice started out at $400,000 in collections, you add five more practices and now you're at $4 million in collections, right, that's not exactly the same to look at a top line revenue number. So one of the things that we do on income statements is we look at it as a percentage. So we look at what is the percentage of revenue that we're spending on all of these different things. So if we're just going to hop straight down to the bottom line, we take the net income divided by the top line. So if you made $100,000 in net profit, divide that by a million dollars in practice, your net income was 10%.Joseph:So as mentioned there, we're going to also make the adjustments that we need for the owner's discretionary expenses, probably going to back out depreciation, amortization, and interest. And we'll be able to get like a pretty clear picture as to how we're doing running a $4 million practice versus a $400,000 practice. Obviously the net income, the bottom line, is going to be different. But if you're making a 2% return on a $4 million practice, maybe you were ahead to not be a $4 million practice, and maybe you would be ahead to stay a $800,000 practice. Right? So we're constantly going to look at the percentages of those things. And as you're looking at those over time, you can compare what's the net income look like, what's the staffing look like as a percentage of income.Joseph:You mentioned the growth expenses, Jonathan. So as we grow and as we get established in this market, maybe it doesn't make as much sense to spend as much money on marketing once our, quote, name is out there. Or it may be one of those things we need to slow down the growth in the practice, so we're going to decrease that. So what do all those things look like as a percentage of revenue? So I think those are the things that I'm looking at in terms of kind of looking at things over time. What do those percentages look like, and how are we doing? And what's our net profit dollars look like? Our net percentage look like? And how do we advance it towards the goals that we have in mind, whatever those goals may be?Jonathan:Yep. And that's the reason we started the whole conversation with the financial statements is saying that they're a body of work, but they're not the end all be all that a lot of people think. There's probably some dentists that are listening now that think that we're almost being blasphemous by saying that financial statements don't answer every single question that has to do with the dental practice. And to the concepts that you're talking about, yeah, I mean the concept of diminishing returns versus scale is something that happens a lot in service-based businesses. Which diminishing returns, just a quick explanation of that, is as you grow larger, the effectiveness of things or the profitability of things does typically go down, unless you have really big economies of scale.Jonathan:There's a lot of people trying to craft a narrative about the DSO space, saying that, "Oh, we've got 20 offices and we get this economy of scale on our supplies. And we're going to make tons of money on that." And when you think about it, okay, let's say that you're going to actually save 10% on your supplies if you have economies of scale. Your supplies are going to be like 7% of your revenue. That means you're going to save 0.7% of your total revenue.Joseph:Seven tenths of 1%.Jonathan:Yeah. Are you trying to grow to 20 locations so you can save 0.7%? That's not the purpose of that, right? You want to get it so the whole number gets bigger. The other part about that is diminishing returns are a really easy concept for me to be able to ... or a really easy example of that is, when a business grows to a certain size ... The way I tell people to imagine it is, think of it as a capacity, think of it as like a circle. And your total capacity is that circle. And I've also taught people to think of it as like a glass, like that you fill with water. When you get to a certain size you may be overflowing with water, your circle is about to burst. And you've got to expand capacity in some way. And when you expand capacity, there's a very few ways you can do that. You can add time, which means that you open more hours. You can add people, or you can add space.Jonathan:And if you already have an effective use of people, but you have access to space, maybe space is the best way to do it. If your people are maxed out in what they're doing in a day, a lot of times what that usually looks like is you adding an associate. And the associate is a really good example of a diminishing return, because in order to have someone there that's a practicing dentist, you can see a dental practice's profitability go from 55% all the way down to like 30% almost overnight when they add an associate in because we're paying this associate so much money to be there comparatively to when they were there before. It's one of the reasons why it's super important to not be adding an associate before you're really ready for it. And there's a lot of different things around what being ready for it means. Like new patient flow, capacity, utilization. There's a lot of different things that go into when that's right for the different dentist.Jonathan:And cashflow too. And also, like you said, goals. What is it that you set out to do? And how does this help you address those goals? So the diminishing return concept in that is that there's a point in time where, if you're a full-time dentist that's very busy, say you have 2000 patients, if you've got like 100 new patients a month coming in, you've got 2000 patients already and you're maxed out and you've got two-and-a-half hygienists, and they're maxed out and booked out four weeks in advance, and you've got two assistants that you're already working out of two and a half chairs a day on, and you've got two front office people that are just stressed to the max, maybe the only thing you have left to do is add an associate. And once you do that, immediately after that you're not going to have 4,000 patients. A way that I tell people to conceptualize the capacity of a single dental practice owner, or single dentist, is somewhere between, it depends on the dentist, somewhere between 1500 and 2500 patients. Maybe up to 3000 patients.Jonathan:In order for you to have two dentists there, you have to have twice that number of patients. It's just simple, right? It has to be that way. And to get to that, once you've upgraded your glass, the bigger glass, you've got to have more water to fill it. In order to get more water to fill it, you've got to have a patient flow. And if you've got 100 new patients a month coming in, and you've got a new person coming in, it's going to take you, to get to 2000 more patients, at least 20 months to get that full capacity. Now you're also going to have attrition, so that's going to create a little bit more of a flow, a little bit longer time for you to be able to hit that point. But in that timeframe, between the time you add that associate to the end of that time, you're going to have a diminishing return. You're going to have an investment in that new person.Jonathan:You're going to be making less money usually. Because usually you have what's called the cannibalization of production, or that's a term that I call it. Because in order to feed that person that came in to work for you, you got to give them some of your production, and they usually don't produce as much as you used to produce. And then you're also paying them 30% of that. So there's a lot of [inaudible 00:21:21] that go into it. But in terms of the growth and scale, whenever we're looking at a P&L, if I look at a practice that has had an associate for only six months, and I looked at that practice a year before, it's going to look very different. So to the determination of the growth and things like that, it's really important you understand your path, what you're trying to accomplish with this practice.Jonathan:I talk to dentists every day, one person will be like, "I want to get to a point where I'm doing 1.5 million a year in revenue, no associates, nothing else going on. I work four days a week, and I'm killing it." And I have other people that said, "I want to own, be adding a new practice and a half every year for the next eight years." Everybody has their own path, and everyone's right at the same time. What's right for one person is not right for the other. But the P&Ls will say different things, because the P&L of that guy who's adding an office every year and a half, they're going to have a lot of growing pains. They're going to have a lot of cashflow issues, they're going to have a lot of profitability issues. They're going to have just a lot of issues because the missing component in that is time. And that time usually it leads back to the non quantitative numbers, or nonfinancial numbers, which are more practice management in nature.Jonathan:So those are really important pieces. Another thing that we talked about earlier that I wanted to talk about is the breakeven point. So when I'm looking at a P&L, a lot of the data that goes into your breakeven point comes from the P&L. There are things that come from the balance sheet as well, technically. Or the statement and cashflow technically. But the breakeven point is a really, really good number for you to be able to tell, as a business, like, "If I don't really have a whole lot going on, if I break my arm next month, how much is this business going to cost me to keep open?" Or, "What's the minimum amount of money I can produce in a month and actually start making money?" Or, "If I want to make, say, $30,000 a month, how much do I need to be bringing in collections?"Jonathan:Your breakeven point is a number that would be involved in each of those answers. I was always [inaudible 00:23:16] the people didn't calculate that internally. And then I have a math background, and so I was like, "I'll just calculate it out and be it." The thing is, it's an evolving number, right? Like it's a number that doesn't stay the same. It has variabilities inside of it. And as you grow it has even more volatility that goes along with that breakeven point. But in general, you can usually come up with a ... Over time it normalizes. Right? So we give that number to our clients every month. "Here's what your breakeven point is," so they can have the context of, "Well, I want to make $30,000. My breakeven point's $45,000. I've got to be producing 75 right now. My average is 55. I got a lot of work to do." They know they got to influence it.Jonathan:They're not going to be surprised when they don't have $30,000 at the end of the month. They're going to know what that is. So what about you in terms of breakeven point, things like that? What are some of the things that you like to use a breakeven point in order to be able to use in terms of management and goal setting and things like that?Jonathan:Hey everybody, Jonathan checking in here. Just so you know, this is a second part of the episode. So if you've not listened to the first part yet, you want to go back and listen to it in the prior weeks. We should have it labeled on the episode title what part one is and part two is. So you should be able to see that in the title of the episode [inaudible 00:24:33] what episode of episode it is. So thanks.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth And Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group, talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the long term.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's tooth and coin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions in the Facebook group. We'll send you the resources when they're available, and we will see you next week.

Join the discussion on Facebook!TranscriptJonathan:Welcome to the Tooth and Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now a very important piece for you to understand is that this is not paid financial advice, this is not paid tax or legal advice. We are not your financial advisors, we are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share, join us on the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it and be able to join us there. Finally, if you need some more help, we're developing a list of resources that are going to be centering around our topics of discussion to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin T-O-O-T-H-A-N-D-C-O-I-N to 33444.Jonathan:Again, that's toothandcoin, all one word, no spaces to 33444. Reply with your email address and we'll email you instructions on how to get into the Facebook group, as well as add you to a list to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well. So onto today's episode, hope you enjoy it.Joseph:Hello, ambitious dentist. And welcome to another exciting episode of the Tooth and Coin podcast. I'm your host Joseph Rugger joined by Jonathan VanHorn. We are at episode number 10 and today we're going to talk about financial statements. Everybody's most exciting, most exhilarating topic that you could ever imagine is financial statement analysis. Jonathan, welcome to the show.Jonathan:Yeah, exactly. I talk about financial statements at night after dinner with my wife with a big old glass of wine and she just loves it. It's a big topic of conversation in our house. It's amazing. Not really. She does not like it. She does not listen to those things.Joseph:Everybody's topic of conversation right before bedtime is financial statement and financial statement analysis. Well, so Jonathan, we were talking a couple of weeks ago and I was talking to you about a job interview that I was sitting in one time and I was getting interviewed by a guy to take over a financial position for a company. And he asked me a question. He said, "What is your favorite financial statement and why?" So I think that'd probably be a good place to start. What are the three financial statements that are out there? Or are there two financial statements? Or are there one? Whenever we say financial statements, I'd say most of our clients, most of our dentists probably only typically think about one financial statement and that would be the profit and loss. But when we say there's three main financial statements or three recognized financial statements, what are those specific financial statements and what are they called?Jonathan:Yeah. So the three most common are going to be your balance sheet, profit and loss statement, cashflow. All three of those have different names that you can call them. I've had people be confused and like, "What's our profit loss? I've only ever heard of the income statement." Or, "What's the statement of income?" Or all those other things. They're the same thing in general, it's the balance sheet, there's your profit and loss or income statement and then the statement of cashflow. Those are the three main ones. And in terms of your question, to me, the financial statements, while there are three separate ones, really to get a fuller grasp of what's going on from a financial picture, you kind of have to be able to look at all three of those at once and be able to read what each of those are saying intertwined with a bit of education.Jonathan:It's not something that you can just intuitively look at for most situations of I'm looking at the balance sheet, I'm looking at the statement of cashflow and looking at the P&L. And all of a sudden, "I know everything about this business," and that just doesn't exist. And one of the big problems in the dental industry is there's a lot of misconceptions around what's on those financial statements. And on one side of the coin you have people that think that they're completely worthless, and then on the other side there are people that think that the financial statements are supposed to have every answer that exists about your practice. And neither of those answers are correct. The financial statements are great and they tell you a lot about the business, but you have to understand what's going on and you have to understand what you're looking for in each of those financials, in order for you to be able to actually get any value out of those financial statements.Jonathan:And I think that's the reason a lot of people have misconceptions and some confusion around the value the bookkeeping brings and things like that. So to me, the answer "What is my financial statement?" It's all of them. And if I had a choice, I'd have all of them plus some practice management information to be able to look at in order to be able to tell what's really happening in a business in terms of the dental field. I think the most correct answer is it depends on the industry because there's a lot of nuances in this. Not only are there different sets of financial statements, there's different ways those financial statements can be reported. There can be an accrual basis, or it can a cash basis, the income tax basis of accounting. There's a bunch of different ways in which those same things can be reported to people. And if you don't really understand how it's being reported to you, you can make some mistakes and not have the full value of it. So what about you? Which one's your favorite one?Joseph:It's a good question that the guy asked me at the time and he had a right and wrong answer in his head. And his right answer was a statement of cash flows, which as many accountants knows it's difficult to kind of glean a picture from somebody that's not used to looking at cashflow statements. So anyways. Let's say all I had to say my favorite financial statement is the balance sheet. And I think that'd be a good thing for us to talk about. We could probably spend an hour on each financial statement and trying to analyze how it all comes together. But my favorite financial statement is the balance sheet. And to me, the thing that always sticks out to me about a balance sheet is it is a measure at a specific moment in time.Joseph:So what is your balance in your balance sheet accounts as of today, as of the end of last month, as of the end of last year, as of mid-year? It's as a point in time. Which is always kind of one of those things like let's take a snapshot of exactly where our assets sit, our liability sit, our owner's equity sits, at a point in time. And to me, in my small accountant brain, it gets me a chance to figure out what are the assets minus liabilities and what's the book value or the net worth of business. Which is something that I think that a lot of people can wrap their heads around once we kind of put it into some simple terms. So whenever we talk about assets, we talk about liabilities, we talk about owner's equity.Joseph:One of the things that I always talked about whenever I was teaching class and teaching students at the college level and teaching accounting 101, they don't really understand how all of it comes into play. So I use the simple example of a home, right? So it's not specific to the business, but it'll kind of help you understand what an asset is, what a liability is and what is the "equity," the owner's equity in that. So we'll just use easy numbers, Jonathan. If you have a house and that you own a house, and that house is valued at $200,000, that is the asset. $200,000 is the value of that house. If you have a mortgage on that house and the mortgage balance, the liability balance on that house is $150,000, right? So we have a $200,000 asset, we have $150,000 liability, then that means the equity... That's something that everybody's going to be familiar with. The equity in your property, in this one specific piece, in this one specific example is $50,000.Joseph:So if I wanted to look at a position of strength or weakness, I can look at a balance sheet. I can look at the balance sheet on the asset side, I can look at the liability side, and then I've got kind of the difference. What you own minus what you owe is your worth, your net worth, your net equity, your net owner's equity. That's made up a whole bunch of different complicated things. But it seemed to click with my students whenever I would say, "Think about owning a house and there's going to be a difference," hopefully there's a difference and hopefully it's a positive amount between what your property is worth, your house is worth minus what your mortgage balance is, and that's the equity that's in the property.Jonathan:Yeah, exactly. And that's a great way to simplify the assets minus liabilities equals your owner equity, which is what you learn in accounting 101 is A-L=O. There's three main categories that go on the balance sheet. And I agree, the balance sheet is a great way to be able to look at the financial health of a company. It may not be able to tell you trends or net profitability or anything like that, but it can definitely show you the liquidity and it can show you what type of debt ratios are coming into play. And it can also show you how much money is this business actually making from a accounting point of view, not necessarily a cash point of view. That's one of the limitations of these financial things as I said before is that if this balance sheet is set up on the income tax basis of accounting, that owner's equity has a lot of different things that affect it, that it can make those numbers look a little odd.Jonathan:And the reason is because that equity number, it rolls over every year and so it's like a running balance. And some people can get kind of confused on it because you can literally have a profitable well ran dental practice and have almost nothing on your balance sheet. Your assets could be, say, $100,000 and your owner's equity could be $100,000 and that practice could be a $2 million practice. So one thing that's an important concept to also introduce is that value does not technically equal the equity. So to take your home value another step further so that people can understand the balance sheet, if that home skyrockets in value... Let's say you bought it for 200,000 and you owe, let's just say, $100,000 and you have a $100,000 owner's equity.Jonathan:If the value of that home went up to $350,000, you still only bought that thing for 200,000, right? But you now have equity of 250,000 because you still only owe $100,000, but the value is higher. So your basis is $200,000 minus $100,000 in liabilities equals your basis is a $100,000. But your value is $150,000 above that. But in the accounting world for the income tax basis of accounting, you don't write up basis to what the value actually is. You just keep it at what your basis is, because that's what we're trying to track on an income tax basis of accounting. So if you're looking at your balance sheet and you're like, "Oh no. I only got $150,000 in assets and nothing else and then $150,000 in equity." You may have a business that's worth a whole lot more than that. And that's just what we call a book tax difference.Jonathan:If we were being very, very, very, very, very, very, very, very thorough, and spending a lot of time on your books and you're paying us a lot of money to make those write-ups and adjustments to actual value, having evaluation done every year and having everything be written up to the value of the practice, then the balance sheet would say those things, but that can be kind of like a hidden thing inside of a balance sheet.Jonathan:So I think that's an important point to get across too, is that the balance sheet shows you a lot of really cool things and also, there can be things that can be a little bit misleading. So when we're talking about the differences in equity, the equity section is the area that always gets kind of confusing to people. So be careful around that piece. But let's talk about what you look for on a balance sheet to see a healthy dental practice, so to speak. Yeah. Let's just focus on dental practices rather than talk about other industries and things like that.Joseph:Yeah, sure. So whenever you look at a balance sheet, as Jonathan mentioned, there's three sections. There's assets, liabilities, and owner's equity. And inside of the balance sheet, most balance sheets are going to sub-categorize all of those different sections. So in your asset section, you're going to have something that's called a current asset. So a current asset is something that can be converted to cash or is cash, can be converted to cash in a year or less. So this would be how much cash is in the practice checking account. Do you have a certificate of deposit? Do you have a savings account? So these things all can be turned into cash either immediately or certainly in less than one year. So those are current assets. And then you've got your longer term assets and you may have some property, you may have some equipment.Joseph:All of those things are going to fall into a separate section of the asset section of the balance sheet. So whenever I'm looking, kind of initially, and I'm taking a quick glance, I'm going to look at current assets. And I'm also going to look at the flip side of that, which is a current liability. So when we talk about a current liability, it's the same one year rule. So the current liabilities are things that are due in less than one year. So think real simple terms like your credit card, that's due within 30 days, right? If you're tracking your accounts payable through your balance sheet, that would be a current asset because that's going to be due in less than a year. Versus a long-term liability, maybe your ten year practice loan, that's going to be at a different section.Joseph:So one of the financial metrics that a lot of banks are going to look at when they're trying to evaluate your financial strength as a practice... And again, this is an imperfect system, there's a tons of different ways to value different pieces. But they're going to look at what's called a current ratio. And it's very simple, your current assets divided by your current liabilities. So just to give you an easy example, if I've got a $100,000 of cash in the practice checking account and I have an accounts payable balance, credit card balance, all of that, all my current liabilities added up to a hundred thousand, then I have a current ratio of one. And what that simply means is if all of those got called today, all of those liabilities, the bank called, the credit card called, the line of credit, all that stuff gets called today. You can pay all of your bills times one.Joseph:If you had, for example, $200,000 in the practice checking account and a $100,000 in liabilities or current liabilities then you could do that twice. So that would be a current ratio of two to one. I mean, when you look at financial statements, Jonathan, I think that a lot of people look at different pieces. I mean, it's easy for me to say that if you have less cash on hand than you do in credit card debt, that's a problem and we need to work through that. But what are some of the kind of healthier things that you're looking for? And we just talked about current assets divided by current liabilities. Or basically, if we're going to super simplify it down, cash divided by bills that are out there. What are you looking for?Jonathan:Yeah. On the balance sheet specifically, the first thing.... So another thing that is important for people to realize in terms of balance sheets, is that everything is listed in the form of liquidity. So the most liquid assets are listed first instead of the assets in your balance sheet. And the way the balance sheet is set up is there's the assets set, what are called just assets overall, and those are broken up into current long-term assets and other assets. And then there's a liability section, which liability section it's supposed to be listed in order of how soon that debt is due. So the first thing that I look at the very top, which is the most liquid thing, which is cash, cash is always going to be your most liquid thing all the time.Jonathan:Usually, the next thing is going to be something like AR inventory equipment, and then other assets like intangibles and things like that will be listed. But I always look at cash. I mean, that's the first thing. Because if I look at a practice and the cash equals $20,000, unless this is a startup, this practice could have some issues going further. There's a lot we can't answer yet. So in terms of a math concept, this is a not enough information type thing. But if I'm looking at a balance sheet that has very little amount of cash, there's some liquidity issues. What happens if a machine goes down and we're going to have to take on debt? If we do have to take on additional debt in order to do that and that can exacerbate the cash problem.Jonathan:So the first thing I look for is cash. I look at how liquid is this business because that can give you a lot of signs and that gives you a lot of context for what you're going to look at when you look at the other pieces of the practice. So the next thing that I'll look at is the current debt. The liabilities that are likely to have to come up soon. Like you said, if cash is less than credit card debt, then that's a big red flag, we've got some issues here, we've got a cash issue. Because that should not be the case in most dental practices, you should not have more credit card debt than cash. From a financial theory perspective, the interest on your credit card debt will eat away at your cash faster than your cash will sit there.Jonathan:So the value of that cash will go down, the interest on the credit cards would go up and you're going to have a problem that's just going to get worse before it gets better. So yes. That's a big issue for most dental practices. If I'm looking at a balance sheet just to kind of analyze how the business is doing. And another thing that I want to really, really quickly hone in on because we didn't preface this. We're just analyzing a practice in terms of looking at someone who has a practice and how well that practice is doing, we're not looking at this in terms of buying a practice because what the old owner did and how good they were at saving money does not affect the new owner.Jonathan:This is not a specific situation that we're talking about. We're looking to buy a [inaudible 00:19:00] that. Because to be honest with you, I don't think I even look at balance sheets whenever I'm analyzing practices to purchase, but when I'm looking at a clients'... If a client says, "Hey, how's my business doing?" I will look at a balance sheet in that regard because it can help me guide them better with what it is they're needing to do. Whereas if we're buying a business, I don't really care what the old owner was doing, I only care what the new owner's going to do. So there's a little bit different of a situation there. And you don't buy the credit card debt when you buy a business, so who cares if they had $100,000 in credit card debt?Jonathan:That could show us something in terms of a spending issue, but the spending on that liability would be affected in the P&L under expenses, so we'd also be already taking that into consideration when we look at the P&L, which we'll get to that in a bit. So anyway. So yes. Cash and then I'll look at short-term liabilities. And then I look at total debt. I mean, how much do we actually have in debt in this office? Because that's a big thing. It's a big deal. You need to know how much money in debt this practice has because if you don't then it's the same thing. Is this a problem that's just spiraling out of control? Is this just we're investing in the practice heavily and we're using other people's money to do that? If so, that's fine, but I don't like seeing a whole lot of debt and seeing cash and credit card debt being flip-flopped.Jonathan:It shouldn't be a negative balance there and we're taking on consistently more debt. The only way I could say that that would be worth it would be is if for whatever reason you're.... I don't know. If you knew that you bought X machine, X machine would be bringing you more money. That's really the only way that that'd probably be making sense. So that's what I look at on the balance sheet. I do look at equity a bit just because I'll have to see if it's an escort for how much in distributions we're taking. Equity has the net income on there, but unless it's something financially in our firm created, I don't really even look at the owner's equity because I just assume that it's going to be wrong.Jonathan:As you can say, Joseph and I have talked before, before he joined our firm. He was like, "I had no idea that so many firms didn't know how to do bookkeeping," right? And we demand a very high quality of bookkeeping service from our company and for our clients' benefit because we believe in what's on those financials. So basically, unless it's a trusted source for that financial statement, I don't even look at it on the equity side because most of the time it's wrong. And so my assumptions of being correct... Usually cash and liabilities are usually right. We've definitely seen people come in with debt and their debt is negative $800,000 and we're like, "This is great. We're going to have some work to do on this one." So that happens. But anyway. So that's really what I look for on the balance sheet as a whole. What about you? Is there anything else that you look for on balance sheet?Joseph:One of the things I love to do with balance sheets is I love to compare them and see. So most of your accounting softwares that are out there or if you have financial statements that are generated, this is basically a book value of your practice that you can look out over time. When I'm doing a financial statement analysis or a client asks me how I'm doing and I kind of really want to dig in, I'll do a balance sheet as of the 31st of last month, then I'll compare that to the prior three months. Or I may put it at 1231 and compare it to the prior three years, and let's see over time what's going on with cash, what's going on with debt, what's going on with owner's equity. And of course, that's also under the assumption, Jonathan, that I'm looking at a good set of books. As you and I have talked many times, we can take a look at a balance sheet a lot and say, "Something's not right there. There shouldn't be a negative upside down balance in an accounts payable account. That's not right."Joseph:So I like to look at things over time. So hopefully you've got a good set of books that you're looking at and you can look and see what's happened to cash over time. If cash goes up $50,000 a month and equity stays the same and we look down and it's because we've taken $50,000 out in shareholder distributions every single month. That's a good problem to have is cash is increasing, distributions are coming out and we're still increasing our overall position. So I like to look at the comparative and see kind of what's going on and what happens. If I see a big, huge decrease in cash of $25,000 in a given month, I may see, "Oh, look at that. I bought a $25,000 piece of equipment. Well, that makes sense," right? That's not money that went out the door because we spent too much money on overhead. That's a piece of equipment that hopefully is going to increase our bottom line.Joseph:So that's one of my favorite ways to look at a balance sheet is to just compare it to the prior couple of periods and see. And you can look at it, if you wanted to do a quarter by quarter and see what 12 31 looked like, versus 9 30, versus 6 30, versus 3 31, just see how things have progressed over time. Those are the ways that I'm looking at. And I'm also looking at the same stuff that you mentioned, which is looking at the cash position and looking at the liability position and seeing what that looks like. There's a ton of financial statement ratios that are out there. One reason that banks and financial institutions like to look at ratios is it puts everybody on the same level.Joseph:So $900,000 of debt for dental practice is not the same as $900,000 worth of debt for a publicly traded company that's huge like a Walmart or a Google, right? Those are not good indicators, right? If you looked at cash in the bank account, my $100,000 is not comparable to Walmart's $100,000 in their cash account. So that's why banks and a lot of financial institutions look at ratios because we can compare what's the debt to equity? What's the debt to assets? What is the current ratio? What's the quick ratio? All of these different things can basically put everybody account on the same playing field to figure out what kind of cash position they are. So my quick easy one to go on is looking at that current assets divided by current liabilities and making sure that that's more than one. And trying to figure out what's that looking like over time?Joseph:We have clients that start out and for one reason or another they have to take out a practice loan and that practice loan doesn't cover everything that they need. So they've got to look at other forms of debt, whether it's a high interest rate debt or it's a credit card they had to take out in advance on a credit card. We see some of these things that happen over the course of time. What you want to see is as you look back at 2018, 2019, 2020, 2021, 2022, you want to see progress in each one of these things. And if you continue to have an upside down assets versus current assets versus current liabilities, I know that we've got a problem and we've got a problem that we need to fix because we don't have any profitability because if we have profitability, we'd probably be able to pay down some of those debts.Joseph:And certainly a bunch of stuff goes into all of those different pieces. You may be taking too much out in owner's draws are spending too much on CE or any of these other things. And one of the things that you mentioned early, Jonathan, was the concept of all of these financial statements work in conjunction with each other. You can't just look at a balance sheet and know everything there is to know about practice. You can't just look at a P&L and figure out if that's a good office or not. You can't just look at a cashflow statement and say, "Well, that's everything you need to know."Joseph:We were talking before the call, what if they had five huge cases in the month of December that jacked up their P&L, but all five of those cases that came through they were super POd by the time that they left the office and they'll never come back again and we're not going to have those five cases. So there's a ton of different things that you've got to look at and evaluate in the overall health of the practice. I really like the balance sheet because it gives us a point in time. It lets us see what do we own minus what do we owe. And we want to see that number increasing over time.Jonathan:Yeah, I agree. I love the fact that since it is a picture of time, you can look at two different pictures. It's kind of like on Facebook, I look at the pictures of my kids and when I look at them now, I look at the difference that they've had and what changes and things like that, right? It's a fun thing to do to be able to see how they've changed. And the business, hopefully, when you look at the things that have changed they've happened in a good way and they're going to be fun to look at too. So yeah. Definitely look at the balance sheet. And when we do that, I do that for our firm and I do that for a lot of things of comparing it period over period, because like I said, the snapshot in time doesn't really tell you the whole picture. The balance sheet over time will tell you a lot more. So I agree.Jonathan:In terms of the other things, just a really quick thing in terms of when you're looking at cash, a way that I try and take this concept for cash is not only do I like to have more cash than I do short-term liabilities, I also like to have enough cash to equal, at least, one to two times what your breakeven costs are going to be on a monthly basis. And I'll use that. So this is going to be a two-part episode. This is episode 10 of the balance sheet. We'll do episode 11 will be the profit and loss. And so we'll move over to the profit and loss now, but you use the break even point to basically use as a metric to take versus your cash amount, to see how much cash you have to be able to sustain kind of a rainy day fund, so to speak.Jonathan:So I like, at least, a hundred to 200% of your breakeven point being in your business bank account with the caveat of you also need more cash than you have short term liabilities. And so probably honestly, the best thing to do is to have your cash, net cash, which would be your total cash minus your short-term liabilities. That amount should be two times your breakeven point. I think that's a very healthy amount of money to keep in there. Anything extra, then a lot of the times in a single owner dental practice that might get funneled out to the owner and then gets reinvested in other places in their personal lives to be able to help with their wealth building and things like that. So let's talk about the P&L, what do you like about the P&L? What is it that gets you going in the morning whenever you see a really nice P&L?Joseph:Yeah. Good Thought. So the P&L, the profit and loss, the income statement, if we're talking nonprofit, statement of activities, right? There's all these different fancy names for it. But it's basically, are we running a profitable business? Is this business making any money? So I think that there's a couple of different kind of old terms that I've heard kind of mentioned out there. So one of them is that revenue is vanity. Like, "Oh, look at me. I'm a $1.4 million practice. Congratulations. Look at how awesome. Let me pound my chest about my $1.4 million practice." Revenue is vanity and profit is sanity. If you have a $1.4 million top line, Jonathan, but you spend 1.8 a year, that's not a good practice. I'd much rather have a $800,000 practice that spends $400,000, right? So revenue, top line, sales, collections, whatever you want to call your top line, revenue is vanity and profit is sanity.Joseph:So I have a tendency to kind of quickly scan and look at what's top line revenue look like and quickly scan at the bottom and figure out what the bottom line income is. As I'm sure you'll probably be able to tell our listeners like, "If that's just quickly where I'm going, what are some different pieces to that that may not tell me the whole picture if all I do is hop straight to the bottom line in a dental practice?" I mean, the vast majority of our clients and the people we work with for the most part are single owner practices. What's the harm in just looking at top line? Top line's 1.6, bottom line is $10,000 or $50,000 or pick a number. What's missing in that piece of the picture that's not giving them a full picture.Jonathan:So again, I'm probably going to beat this like a dead horse, is that the first thing is that you got to make sure their financial statements are really accurate because if they're not, then you're going to be pounding sand to try and get any actual information off of those things. So to me, the net income or the net taxable income or whatever you want to call it, net profit, whatever it is, it has to be set up in a format that you can understand and quickly pull out information that is discretionary in nature. One of the things that happens super commonly in dental practices is that there's a lot of discretionary expenses. So for example, let's say... Obviously, every person's situation is different, but some people for example take, say, a $290,000 wage.Jonathan:And the reason being is that that's what they think their compensation should be. Maybe it's a percentage of their production, it's a percentage of revenue, maybe it's just a flat amount, but a lot of the times when they have wages of those amounts, when they're paying themselves, has something to do with a 401(k) that's in the practice, so that they can have a profit sharing plan. When the calculation is being done, they get a maximized amount being contributed from their employee and the employer deduction. And then whenever they do the profit sharing amount calculation, they usually get a pretty favorable amount going towards them if they set it up in that way. I've seen dental practices that have came through, they set that up and they are literally spending $150,000 more than they have in profit on the owner's compensation. So the net income says a negative $140,000 in net income because the owner payrolled themselves 290,000.Joseph:Doesn't sound like a net loss to me.Jonathan:Exactly. So that's the danger of doing that is you have to know what's discretionary and what's realistic. If you're really analyzing a business and seeing how profitable is this business, it's a complicated answer because the owner should be compensated, obviously. But if that person taking $290,000 in wages, top line revenue is, say, I don't know, 800,000 and they only produced... I'm not saying only as in it's a bad thing. I'm saying only in terms of the conversation. And they only produce, say 600,000 and they took out almost 50% of their production in wages, not to mention payroll taxes and everything that goes along with that benefits.Jonathan:So that number may not be what... If you had an associate and they were working for you and you had a practice that someone else was working at and they produced 600,000 out of the 800,000 being brought in. Would you pay them $290,000? Probably not. So it's discretionary, right? So what would be more realistic? And if you're paying them a third, you'd be paying them 200,000. And that would cut that $140,000 loss into 60,000. So it all depends on the practice. There's a lot of different things that go into it, but if you're analyzing a practice [inaudible 00:34:12], what I do is when I look at P&Ls I do a head count of seller's discretionary earnings.Jonathan:A lot of people use the term EBITDA in the dental field, which is not really EBITDA because most people never put back in the actual cost of someone to replace the owner. So the correct term of that is seller's discretionary earnings, which basically is you back out whatever was discretionary, which is typically the owner's wages. Is there a family member that's on payroll that is getting 40, $50,000 a year to be an office manager? Are they actually there every day? Are they actually fulfilling all the roles what the office manager would do? Payroll taxes associated with that have to be backed out. Are there any travel expenses for CE, there maybe be more expensive that they wouldn't normally give those same types of reimbursements to an associate to do those types of things with? Are there any types of business entertainment? Are there any types of health insurance that's just for the owner?Jonathan:There's tons of different things that can go into that P&L that will be on the P&L if it's properly being recorded, but needs to be pulled out to be able to compare it to other benchmarks of other practices. So that's another reason why I don't really trust a whole lot of the benchmarks that are out there in the dental field because if I don't have the full faith of every CPA that's out there's financial statements, then how am I supposed to have faith in a study that benchmarks using those financials as their basis point?Joseph:Yeah. And they're all self-reported too, right? [crosstalk 00:35:54] financial statements, they're self-reported.Jonathan:Yeah. So there are generalities and we work with around 250 offices and we see there are just differences in dental practices. So P&L to me is a fantastic thing to look at to have an understanding what's happening. But to me, you have to be financially savvy enough to calculate out that seller's discretionary earnings in order to be able to calculate what the actual profitability of this practice is from a dollars and cents perspective. Once that is done, you would then look at those different key categories, which again, is another area where I find a lot of dental practices financials don't have things properly segmented inside of their financials. So you can't do that. So the presentation of the P&L for dental practices is just as important as the understanding because you and I could look at a financial statement that would come to us and if it's not a really, really well-defined P&L, I mean, we've seen P&Ls that came through that have had 10 expenses on it. And that's all expenses on the P&L. They have nothing else. And this is-Joseph:Wages.Jonathan:Yeah. Wages, payroll taxes is added on that, insurance is on that. They had a consultant probably in wages, they probably did some recruitment that was in wage. It's just all in one big line item. You can't define anything out of that. So presentation is just as important as well. So what about you? What are other things you like to look at on the P&L? Because I could probably talk about this for another two hours.Jonathan:Hey, everybody. Jonathan checking in again here. Just so you know, this episode went really long. This episode is actually a three part episode because there's a lot for us to talk about in these episodes. So make sure you follow up and listen to the following conversations that we'll release over the next couple of weeks. Again, this is a three part episode. This is part one. And we will check in with you on the rest of it going forward. Thanks.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner and you're interested in CPA services head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country. We'd love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. And we'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group. Talk to us about what we've talked about. Join in on the discussion and let's create an environment where we can talk about some of these things, so that we can all help each other get through these things together, so that this adventure of business ownership is more fun, more productive, and better in the longterm. Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Reply with your email address, we'll send you the instructions in the Facebook group. We'll send you the resources when they're available and we will see you next week.

Financial statement analysis is a set of techniques and tools which allow us to make informed decsisions about an organisation's financial health. Let's take a look it!

In this episode we are joined by Professor Partha Mohanram. Professor Mohanram is the John H. Watson Chair in Value Investing at the Rotman School at the University of Toronto. His paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" is also the basis for one of the quantitative models we run on Validea. In this interview, we cover a wide range of topics based on Professor Mohanram's research, including: - The criteria of his G Score strategy - Whether accounting standards should change to account for intangible assets - The balance between quality and value in portfolio construction - Separating winners from losers in Financial stocks - Whether investors can profit from information on Twitter FOLLOW PROFESSOR MOHANRAM ON TWITTER https://twitter.com/pmohanram PROFFESSOR MOHANRAM'S RESEARCH https://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Mohanram ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

Kris Allee is an Associate Professor & Doyle Z. Williams Chair in Professional Accounting at the Sam M. Walton College of Business. After receiving his Master of Accountancy from BYU, Kris received his Ph.D. in Accounting from Indiana University. Kris specializes in Firm Disclosure Policies, Financial Statement Analysis and Valuation, Banking, and Taxation. His research has been published in many accounting journals.

PODCAST EPISODE (EP10) Analyzing Your Financial Statements Welcome, you’re here at The Beacon, so glad you found us! Prepare to have your Blind Spots Illuminated! Over the last 3 episodes we studied and examined the key financial statements you should be receiving monthly; 1. the balance sheet 2. the income statement or P&L 3. and the Statement of Cash Flows Now, what the heck are you supposed to do with all that information! In this episode we will examine some basic financial statement analysis. Much of this analysis involves calculating ratios from the data contained in the financial reports. As I promised at the very beginning, the math here is very simple…Division, nothing more complex than that! The listener may find it easier to follow this analysis and ratios by printing out the show notes and using them as a reference. Ratios offer points of comparison , which can reveal more than the raw numbers alone. Ratios can help you determine if the numbers are favorable or unfavorable. Ratios themselves can be compared: 1. Over time 2. With projections, and 3. With Industry averages and benchmarks The Questions we are looking to answer are: 1. Can the business pay all of its bills? 2. Did the business make any money? and how much? 3. Can financial performance be improved? Remember our financial analysis provides a good picture of current financial health along with past performance. These numbers are more historical in nature rather than predictive. Although financials can help with planing and tactics, future performance of your practice depends on other critical factors beyond finance including: 1. The ability of Management to react to local economic conditions, market competition and changes. 2. The Experience and Capabilities of the doctors in the practice. 3. The practice’s current financial position. Recall the limitations of financial reports too; 1. Many of the dollar values are estimates at best. 2. The Balance Sheet does not show actual Net Worth. 3. Assets are valued at their Historical cost. Book values contained in these reports represent Original cost less accumulated depreciation. 4. Depreciation expense shown on the Income Statement is only an estimate of the amount of asset used, not the Value of the Asset. To begin our study, we will break down the Financial Ratios into 4 broad categories which can be used to analyze a companies performance; 1. profitability 2. leverage 3. liquidity 4. efficiency PROFITABILITY: a measure of a companies ability to generate sales and control expenses. This answers the question, Did the Practice make Money, and how much? GROSS PROFIT MARGIN PERCENTAGE: GROSS MARGIN = GROSS PROFIT / REVENUE (from the P&L) Recall, Gross Profit = Revenue - COGS or COS Gross Margin Shows the basic profitability of the product or service before expenses are considered. Or, how much the company must pay out in Direct Costs to make the product, or deliver the service. Trends are important here because they can indicate potential problems. Gross Profit trending down could mean that Market pressures and Competition are reducing Pricing Power, or the cost of material and labor are rising. Gross Margin can be an early indicator of favorable or unfavorable trends in the marketplace. OPERATING PROFIT MARGIN PERCENTAGE: OPERATING MARGIN = OPERATING PROFIT (EBIT) / REVENUE (P&L) Recall, Operating Profit = Gross Profit - Operating Expenses Operating Margin indicates how well a company is running its business from an operational standpoint. Or how well the managers are doing their job controlling expenses. Trends are important here too! Downward trend is a warning that COSTS and EXPENSES are rising faster than SALES. NET PROFIT MARGIN PERCENTAGE - the proverbial BOTTOM LINE (P&L) NET MARGIN = NET PROFIT / REVENUE Tells a company how much out of every sales dollar it gets to keep after EVERYTHING else has been paid for - payroll, vendors, lenders, and taxes. RETURN ON ASSETS: Tells you what percentage of every dollar invested in the business is returned to you as profit. ROA = NET PROFIT / TOTAL ASSETS (balance sheet) Remember, these ratios are more powerful when they are tracked over time to establish trend lines. LEVERAGE RATIOS: DEBT VS EQUITY FINANCING Let’s us quantify how a business is financed, or how a business uses debt. The Financial Analyst’s word for debt is LEVERAGE. One can compare this to a Mortgage. A mortgage allows you to purchase and live in a bigger home than you might otherwise be able to afford with your Cash savings alone. Also, the Interest payments on your mortgage debt is deductible from your taxable income making your home even more affordable. When you first take out a Mortgage, and say put down 20%, you are Highly Leveraged! You have more debt than equity. A business is similar in that it can invest in profit generating assets without drawing down its cash reserves and simultaneously deduct the interest payments on this debt from its taxable income. That’s a double win! You should note that BANKERS LOVE to look at your leverage when you apply for a loan, either business or personal. DEBT-to-EQUITY RATIO: DEBT-to-EQUITY RATIO = TOTAL LIABILITIES / SHAREHOLDER’s EQUITY Or, How much debt the company has for every dollar of shareholders equity. INTEREST COVERAGE: INTEREST COVERAGE = OPERATING PROFIT / ANNUAL INTEREST CHARGES Which is a measure of the company’s “interest exposure”, or how much interest it is paying relative to how much it’s making. Shows how easy it will be for a company to pay its interest. A high ratio means the company can take on more debt. LIQUIDITY RATIOS: Can we pay our bills? Can the company meet all its financial obligations, not just debt, but payroll, bank loans, payment to vendors, taxes, etc. Tracking this is critical for small businesses as they are the ones most in danger of running out of cash! This is an easy Ratio to Calculate and Track, it’s called the CURRENT RATIO CURRENT RATIO: measures Current Assets against Current Liabilities CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES We are looking for a Ratio greater than one (1), but a Current Ratio too high means the business is sitting on its CASH rather than investing it or distributing it to shareholders. Finally are the … EFFICIENCY RATIOS: Managing the Balance Sheet Here we will Learn to Manage your Assets and Liabilities; consisting of: Inventory Receivables Payables Property, Plant and Equipment INVENTORY We have 2 metrics here, INVENTORY DAYS and INVENTORY TURNS, both measure how efficiently a company uses its inventory, both are difficult to calculate in a dental office that uses a Modified Cash Basis of Accounting. The concepts are still very important. INVENTORY DAYS - Measures the number of days inventory stays in the system or on the shelfs. While, INVENTORY TURNS- Tells us how many times inventory is turned over and replaced in a year. Or the number of times inventory sold out , or could have sold out, and had to be reordered in a year. The take home point here is… THE LOWER THE INVENTORY DAYS and the HIGHER THE INVENTORY TURNS the BETTER YOUR CASH POSITION. again… Translated, we don’t want Inventory just sitting on shelves. We want it quickly being transformed into product and services and ultimately REVENUE! DENTISTS should take note here! Less inventory, not more is key. This flies in the face of quantity discounts that your vendors offer which works in the opposite direction; INCREASING INVENTORY DAYS and REDUCING INVENTORY TURNS, effectively REDUCING YOUR CASH POSITION! I like to remind dentists that they should image dollar bills, rather than supplies, sitting on their stockroom shelves. A practice should keep just enough inventory on hand for the treatment scheduled. Yes, that is easier said than done, but at least resist, just a little bit, the temptation to buy supplies in large quantities thinking you are saving a lot of money. Instead, you are spending your cash that could be sitting in your bank account, not on the shelfs of your office! This practice becomes even more costly if supplies expire or become outdated. Make sure your vendors will work with you to exchange outdated or soon to expire supplies. That discussion is best had prior to placing an order. RECEIVABLES DAYS SALES OUTSTANDING How fast customers pay their bills. DSO = (ENDING A/R) / (REVENUE/DAY) This metric can be, and should be calculated and tracked monthly! It is very important to monitor how efficiently your office systems can collect outstanding balances. Improving DAYS SALES OUTSTANDING is a FAST TRACT to IMPROVING YOUR CASH POSITION with NO CHANGE IN REVENUE OR COSTS. Again, Dentist’s should take note here and monitor and manage this metric very closely. PAYABLES How long it takes you to pay your invoices or bills. DAYS PAYABLE OUTSTANDING is the cousin to Days Sales Outstanding Days payable outstanding = Ending Accountants Payable / (COGS/day) This is not a metric we will calculate, and track, but important to understand that paying your bills promptly will help to maintain excellent credit. Here, the higher your Days Payable Outstanding the longer you get to keep your money and the better your cash position, but the less happy your vendors are likely to be. This again flies in the face of what many advisors recommend at year end, which is prepaying several months of expenses; ie, credit cards and rent. Accelerating these PAYMENTS REDUCES your CASH POSITION. this is worth repeating again….. If you are prepaying, or paying your invoices early, by all means ask for a prepayment discount from your vendor. PROPERTY, PLANT and EQUIPMENT TURNOVER PPE Turnover = revenue / PPE (balance Sheet) How many dollars of Revenue does each dollar of PPE (hard assets) generate. What is important here is the concept. One wants an increasing PPE Turnover. Translated, that means one wants higher revenue generated for the Hard Assets of the Practice. With this metric in mind consider your practice. Can you answer these questions favorably? * Will that new or bigger office enable you to generate more revenue? * Will that in office milling machine, or intra oral scanner generate greater revenue? greater efficiency? greater productivity? * Will that Cone Beam CT scanner generate more revenue? These are questions a financially knowledgable business owner would have the answers too, or at least consider prior to making a significant capital investment! Consider this the next time you are preparing to make a capital purchase. Please note, Tax Savings are not considered here! One can also calculate TOTAL ASSET TURNOVER Total Asset Turnover = Revenue / Total Assets Here again we want a high Total Asset Turnover Ratio. We can achieve this through a combination of the following: * efficiently using fixed assets * reducing inventory (inventory days and inventory turns) * reducing receivables (DSO) * increasing sales (through volume or pricing) That list is critical and worth repeating. The astute financial manager would concentrate efforts on using fixed assets efficiently, reducing inventory and reducing receivables as well as increasing sales. WHAT RATIOS ARE MOST IMPORTANT TO YOU! Built into your income statement are ratios for each line item by percent of revenue as well as dollars. These percent of revenue are easier to track over time to establish trend lines. This internal standard is the best way to monitor your progress and management of expenses. Making sense of your expenses begins with accurate accounting which requires an organized chart of accounts. This does not always exist, as many dental offices just use the standard chart of accounts that comes with quickbooks. One of the very first tasks we at OmniStar do when consulting with an office is to better organize and categorize the chart of accounts so financial reports will be easier to understand , more meaningful and more insightful to you, the user. One final Ratio to Consider is Return on Assets, which can be broken down into two ratios we have already examined: * Net Profit Margin and Asset Turnover. (Net Income/Revenue) X (Revenue/Assets) = Net Income/ Assets = ROA Simply stated ROA equals Net Profit Margin X Asset Turnover! This is Key Point because it contains the secret formula to driving greater Return on Assets, a Pivotal Business Metric. One can increase your ROA with 2 tactics: Increase Net Profit Margin by: Raising fees or Delivering services more efficiently, and/or Increasing asset turnover by: reducing average inventory (inventory days and inventory turns) reducing receivables (DSO) reducing the purchase of additional assets Market forces and competition may prevent you from improving Net Profit Margin. Working on your Balance Sheet Levers of Inventory, Receivables, and Assets could be your best move to improving your financial results. SUMMARY In summary we have examined some basic metrics used to analyze your Financial Statements. These metrics are almost all ratios which allow comparisons and benchmarking to other businesses and practices as well as establishing trends within your own practice. Time spent in the Analysis of your financial reports should answers the questions; 1. can we pay our bills 2. are we making money 3. how can we improve performance. One should note that there is NO metric for OVERHEAD, a KPI (Key Performance Indicator) that dentists like to track, compare and brag about with their colleagues. OVERHEAD is an imprecise term, whose definition changes depending on who is doing the analysis. Questions like, are doctors salaries included? what about doctor perks? CE? Automobiles? Retirement Plan Contributions for Staff? and Doctors? This is a perfect example of how financial metrics can be distorted. Eliminating many of these may give the false impression that your overhead is low, which may not, in fact be true. Operating Margin may be the best estimate of overhead, as it includes Indirect Costs as well as General, Office and Administrative Expenses. Also note that TAXES are not emphasized in this analysis. Taxes are not a key lever for improved business performance. Most dental practices are pass through entities, whereby the partners or owners pay all the taxes, not the business. Tracking and analyzing this financial data requires some work, time and effort. This is the work a business owner must commit to in order to achieve a successful and growing practice. If you are not interested, or do not have the time or knowledge to monitor these critical financial metrics, then by all means please enlist the help of a consultant or accountant who can and will. Remember, what Warren Buffett said: “The more you learn, the more you earn!” Please do not just ignore these reports, because poor financial and cash management will always become apparent at some point in time. We would call this a BLINDSPOT. The Fact that Financial Reports are not understood by many doesn’t make it any less of a problem for them or their practice. I will share how I review my financial reports next…. Be reassured that after just a few months experience this process can proceed rather quickly. Any large changes noticed may require a deeper dive by me or with the help of our accountant. First, I Check the date on the reports. They are typically a month or two behind due to the time it takes the accountant and book keeper to reconcile our statements. Next, I will check our bank account balance, I know this is current. I then start with the Statement of Cash Flows. What is my Operating Cash flow? Investing Cash flow? and Financing Cash Flow? How does this month and YTD Compare? Does the Ending Cash approximate my Bank Balance? Next I look at the Income Statement I examine Total Income percentages and compare the current month to last year, and the current YTD with the last YTD. I then look at each line item focusing on supply costs, employee wages, and other operating expenses. I note any significant percent changes, up or down, and then try to explain them. If I can’t I will call my accountant for a deeper dive. I expect some fluctuations with time, which are normal and could be due to a large order or a large infrequent expense. I then look at Gross Margin and Operating Margin comparing the current month to last year, and current YTD with last YTD. Finally I hit the Balance Sheet and again compare the current YTD with the last YTD. You can begin to see a pattern here; tracking and comparing current financials with last years financials. With this technique you begin to establish your own internal standards. This is an excellent way to monitor your practice financials and make any necessary adjustments to improve your financial performance. I am especially interested in the Equity Section of the Balance Sheet, as this is where all of our YTD profit accumulates! My partner and I take a modest salary draw monthly, and then as Equity Accumulates we will distribute some of the Profits as a bonus to ourselves throughout the year. I like to keep at least 2 months of payroll in the bank as cash. I sleep much better at night knowing our cash reserves are good. and Finally, we are done for now! Until next month! So that wraps things up for this Podcast.  Hopefully you have a better understanding of some basic Financial Statement Analysis and Metrics. You don’t have to know how to build a car in order to drive it, but you do need to know how to operate it, read the dashboard, adjust the knobs and dials, watch for the indicator lights, and keep the car on the road and out of the ditch. The same is true for the Financial Reports of your practice, one of your most valuable, cash generating and wealth creating assets. Don’t ignore what’s it’s telling you! Your practice talks to you in numbers, those numbers are on your financial reports. We hope that this information has created a few “Ah Ha” moments, or stimulated some additional questions you can direct to your advisers or accountants.  Hopefully, you feel less intimidated with Financial Reports now so that you can spend time familiarizing yourself with this information. You can always replay our Podcasts for review. Check our show notes for some excellent references. We welcome your inquiry here too at OmniStar Financial.  We are experts in Dental Practice Financial Analysis and Insight. Our contact information can be found at our website OmniStarfinancial.com  .  You will also find a link to sign up for our newsletter.  Please share this podcast if you found it helpful, and leave a review on iTunes too.  We welcome your feed back and suggestions for future podcast sessions.  You can always find me, your host, david darab, at my twitter handle, @ddarab. Thank you so very much for tuning in and listening.  We are very grateful for your time and attention and so very pleased to have you in our audience. David Darab, DDS, MS, MBA REFERENCES: Financial Intelligence by Karen Berman and Joe Knight Stark Naked Numbers by Jason Andrew

Credit title: Subject Matter Expert: Frihardina Marsintauli, S.E., M.Ak. Dokumenter: Binus University Uploaded by: Knowledge Management and Innovation Binus University

Credit title: Subject Matter Expert: Metya Kartikasary, S.E., Ak., M.Ak. Dokumenter: Binus University Uploaded by: Knowledge Management and Innovation Binus University

Feb.5 – Financial Statement Analysis – In this class we take a brief look at the analysis of financial statements to judge a company’s health.

Bronx native, Johnny Velasquez is your everyday business man. Holding a Bachelor’s of Science in Accounting, an Associates in Business Administration and pursing a Masters in Financial Statement Analysis, Johnny has had a run at common yet lucrative businesses like a local bodega, luxury cab service, three wine and spirit stores, an accounting company focused on taxes, and a traveling network. Currently Johnny is overseeing operations at his bar and grill Studio 735 located in Harlem NYC. His philosophy towards business is be selective at how you invest these three resources – your time, energy and money. Today we discuss his journey as a business man. --- Support this podcast: https://anchor.fm/the-ash-cash-show/support

As you know, Amazon bought Whole Foods recently. If you don’t, I’d love to get you on the show and learn how you develop such a low-information diet, especially if there is an organic option that can be delivered in two hours - no, I’m not kidding. Back to the skin of the matter. Why did Amazon buy Whole Foods? What are the strategic implications of the purchase? Is Amazon close to having monopolistc power on online retail? Today, I’m sitting with Patrick Badolato, an accounting professor at the University of Texas McCombs school of business, and a few more things:PHD in Accounting from DukeTeaches in the MBA, MSTC, MPA and MSF programs at UTWorked with and consulted for Harvard Business School and Harvard Business Publishing on various accounting materialsHis teachings focus on Financial Accounting, and Financial Statement Analysis, and he was actually my professor at the MS Tech Commercialization this summer. We’re discussing:Performance of Whole Foods over the yearsWhole Food’s First-Mover Advantage vs. Sustainable Competitive AdvantageHow has Amazon changed over the years?How would you weigh the convenience of online vs. the experience of online shopping?Disclaimer: This is not stock recommendation. This is a conversation.

Asgeir B. Torfason is Assistant Professor in the School of Business at the University of Iceland where he teaches Finance, Accounting and Financial Statement Analysis. Asgeir defended his PhD at Gothenburg University in May 2014 with dissertation: Cash Flow Accounting in Banks - A study of practice. His research combines bank management, finance theory, monetary economics and accounting studies. Previous research has focused on asset values and long-term investment in real estate, a field where Asgeir has extensive practical experience, covering the Nordics as VP for a REIT listed on NYSE. Prior to that he worked in university management after getting an MBA from Norwegian Business School in Oslo, and studied earlier Philosophy and Economics in Iceland. Check out the links, resources and books mentioned in this episode at www.economicrockstar.com/asgeir

Earnings manipulation can make a company look very profitable, while in fact they are bleeding money. This week’s guest, Hewitt Heiserman, is an author of the book It’s Earnings That Count and an expert in financial statement analysis. He devised a Read more › The post MTI009: Earnings Manipulation and Financial Statement Analysis with Hewitt Heiserman appeared first on Money Tree Investing Podcast.