BC ACCOUNTING
Saved by @AnmolNarula11

The #1 reason a company fails:

Cash flow issues.

Track this metric to thrive:🧵

 There are 2 types of operators:

Those who...

1. Track everything
2. Track nothing

Whether ignorance or information overload - neither is ideal.

Instead, choose fewer, but more meaningful KPIs.
Cash Conversion Cycle (CCC) is simple, but has far reaching application - that's why I like it.

The info can be applied to:

1. Finance
2. Operations
3. Customer Management

One centralized KPI keeps departments working together.

The best part?

It's centered around cash.
What is CCC?

The time (in days) it takes a dollar to go from product or service to cash in the bank.

Note: CCC is used for inventory investments, but the service equivalent is called:

Service-to-Cash Cycle.

Same principles, so we'll use CCC for simplicity.
How is it measured?

In days, and...

Above 0 = longer to sell & collect cash than to pay vendors.

Below 0 = faster to sell & collect cash than to pay vendors.

The lower, the better.

Higher numbers indicate current or future cash flow issues.
Though typically a financial metric, it has use as a company-wide measuring stick.

How is it used across departments?
FINANCE:

Strong CCC means there is cash to fuel growth.

Without it, growth must be financed.

It's risky - with larger receivables, comes larger payables.

When bills are due & there's no cash...

You know what happens.
Long A/R cycles are interest free loans to customers that bear opportunity cost.

Make cash collection a priority & finance teams can analyze new opportunities instead of restructuring debt.
OPERATIONS:

Collecting cash quickly is a function of operational efficiency.

Product/service, sales, A/R, & A/P teams must be working together with accurate and timely information.

This is easier said than done.

Low CCC = effective management.
RELATIONSHIP MANAGEMENT:

Getting great payment terms from customers & vendors requires quality relationship management.

Consistency, reliability, & being liked will dramatically improve the cash position.

Treat them well and be clear with expectations.
So, how important is CCC?

Extremely.

Harvard Business Review credits a negative CCC for Amazon's survival of Dot Com bust.

By collecting before spending, sustainable growth was possible.

Competition was financing product purchases, hoping to collect.

A viscous cycle.
How can you implement in your small business?

With my SEO company, Bright Line Media, I collect cash 21 days before I owe vendors.

It wasn't always this way.

I once paid a vendor 2X before getting paid and it prompted change.

Here's what I did:
I called customers and switched:

1. Payment date to the 5th
2. Must pay via Stripe
3. NO physical checks

Receivables, solved.
Next, I called my vendors:

I negotiated better payment terms by always paying on time & promising to pay via ACH (no fees).

Payment Date 26th.

21 Days from collection to payment.

New sales enter into this cycle & never incur an out of pocket cost.
Cash Conversion or Service-to-Cash Cycles change the fortunes of a business quickly.

Quick Summary:

1. Don't overproduce / hire
2. Collect cash quickly
3. Set consistent payable cadence
4. Cross department communication

Build a healthy company - on the cash you're owed!
Lastly, I recommend having an accountant or CFO do the math - accuracy is critical.
If you found this helpful, please RT the 1st tweet so others can find it.

Follow me @barrettjoneill for more on business, growth, & SEO.

More from Barrett O'Neill

Barrett O'Neill
Barrett O'Neill
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Tinder used this phenomenon to turn college hookups into $1.4B in sales:

Network Effects

What they are & how to use them: 🧵

In 2012 there was a need for an easy-to-use "dating" app for millennials.

The large players (Match, eHarmony, etc.) had ignored the college market.

But 18-24 year olds were craving a mobile-first option that didn't require an annoying questionnaire to get started.

Tinder created the solution that the market wanted but faced a challenge.

Early users.

No one would use a dating app that had few eligible candidates on the platform.

Traction is an issue that every platform business must overcome.

It's a classic "chicken or egg" problem.

But if the problem is solved it unlocks a powerful law of growth called network effects:

It's when the utility of the platform becomes greater with each new user.

As the user base gets larger each user receives additional benefit (more dating options) leading to rapid growth.

Conventional wisdom would suggest: target ads at college students and watch the registrations roll in.

But tapping a network effect is much more nuanced than that.

There needs to be:

A high degree of trust, common interests, and incentive to tell others about the platform.
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Barrett O'Neill
Barrett O'Neill
@barrettjoneill
11 pricing strategies so effective customers will line up to pay you:

Price Anchoring:

Anchoring is a psychological bias that overemphasizes the first piece of information received.

Here's how its used:

Sellers show prospects a high number and then follow it up with a lower price to increase perceived value.

More value = more sales


Decoy Pricing:

It's common to see pricing options that comes in three's.

One of the options is a "decoy" or a fake designed to increase sales of a cheaper plan.

For example:

The presence of the £1680 plan increases the sales of the £560 because its relatively cheaper.


Freemium Pricing:

Companies allow partial use of their products in exchange for creating an account.

Typically, top features are restricted or the user cannot have their experience ad free.

Free versions are effective at "warming up" prospects to become paid users.


Price Reframing:

Divide the monthly or annual prices by the number of days in that period to show the daily price, or smallest number possible.

Also, compare pricing to everyday objects like a cup of coffee to make bigger costs more palatable.

Lower number = less friction.
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Barrett O'Neill
Barrett O'Neill
@barrettjoneill
Sam Walton died with a net worth over $25 billion.

But years earlier, an unforeseen threat left him with NOTHING.

Here's how to identify & neutralize risks coming for your business:🧵


Sam Walton built Wal-Mart from concept to the largest retailer on earth.

With $559B in sales & over 2.3M employees (2021), the magnitude of his creation is hard to comprehend.

But all of this success isn't random, it can be traced back to a turning point in 1950.

5 year earlier, in 1945 Walton purchased a Ben Franklin Variety franchise in Newport, Arkansas.

Undeniably ambitious, his goal was to have the most profitable Ben Franklin within 5 years.

He smashed his goal & earned $250K in revenue with $40K in profit ($400K in 2021).


With 4 young kids, a loving wife, and a thriving business, he had it all.

Until he didn't.

In 1945, an eager Walton signed a 5 year lease with an opportunistic landlord.

It had no option to renew -- Walton had unknowingly handed the landlord leverage.

Then in 1950 with the lease expiring, Walton received unexpected news.

The landlord would not renew at ANY PRICE.

Impressed by Walton's success, the shark-minded landlord used his leverage against him.
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Barrett O'Neill
Barrett O'Neill
@barrettjoneill
One company increased sales 262.5% with this pricing strategy:

The Decoy Effect.

What it is & how to use it: 🧵

Companies like AMC, Starbucks, & "The Economist" use psychology to maximize profit.

They leverage behavioral science to shift buyer preferences from the buyers needs to their highest margin products.

Here's how it works ⬇️ ⬇️ ⬇️

The human mind is exceptional at comparing two items.

But, the presence of a 3rd option causes a short circuit.

With a 3rd option present, the mind begins comparing options against one another.

This shifts focus from fulfilling ones needs to finding the best value.

Companies include "decoy" options to highlight the value of their target (usually highest margin) options.

There is little to no intent to actually sell the decoy.

So, what does a decoy look like?

It's similar, but slightly less appealing than the target.

Movie theatre popcorn is a classic example.

The large size is the target option - it's the most expensive & highest margin.

Without the medium, movie-goers are making a decision based on how much they want to eat.

But, add the decoy (medium)...
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Barrett O'Neill
Barrett O'Neill
@barrettjoneill
The best startups test new ideas rapidly and inexpensively.

Over-commitment to a losing idea can be devastating.

A tactical approach to finding winners: 🧵

With limited financial & human capital, ideation and testing require efficiency.

Startups don't have unlimited resources to waste pursuing ideas that aren't winners.

Don't launch products or features without some certainties.

(Or strong supporting data)

But how?

Ask the market its opinion BEFORE creating.

Most founders falsely assume products need to be created, then demand tested.

Knowing speed is everything, the best startups reverse this process:

Test, then create.

⬇️ ⬇️ ⬇️

1. Landing page

When an idea is deemed worthy of testing:

Use WordPress, Webflow, or Carrd to mock up a landing page for the idea.

This should take 1 day, and insinuate the product is ready or will soon be ready for purchase.

It's not disingenuous, it's market research.


2. Call to action

With a well-designed landing page, make it conversion-ready with a strong CTA.

The CTA should request the visitor purchase, enroll or sign up.

Once the CTA is clicked/completed, let prospects know that the product/service is "coming soon."
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@soicfinance
Everything about Free cash Flow Simplified!

What we will talk about in this 🧵🧵:

1⃣What is Free Cash Flow
2⃣How to calculate Free Cash Flow
3⃣Types of Free Cash Flow
4⃣Importance & Limitations of Free Cash Flow

Let's dive in ⤵️⤵️


What is Free Cash Flow?

Free cash flow means the cash that is left over after a company pays for its operating expenses and capital expenditures (Capex) like purchasing new machinery, equipment, land & building, etc. and satisfying all its working capital needs.

In simple words, suppose whatever cash that is left with you after you spend your salary or income is known as Free cash flow that you can use for different purposes.

The more FCF a company has, the better it is. Businesses which generate high FCF can:-

1⃣Give investors higher dividends
2⃣Do share buybacks
3⃣Build a war chest for acquisitions or Capex.
4⃣Reinvest in the business when opportunity arises with lesser dependence on debt.

How to calculate Free Cash Flow👇:

To calculate free cash flow, all you need to do is open the Cash Flow Statement and subtract "Net Capital expenditure" from "net cash from operating activities".
ACCOUNTING
Ali Ladha
Ali Ladha
@AliTheCFO
STOP focusing on Profit

START focusing on Cash Flow

Cash Flow Statement 101:

Every company has 3 reports in its financial statements

1. Balance sheet
2. Income statement
3. Cash flow statement

Most people focus on the Income Statement to look at PROFIT

There is nothing wrong with this…

But profit, isn’t CASH FLOW

Profit is an accounting measure

It doesn’t tell you how much MONEY actually came into the business

Sounds confusing?

Let’s look at an example:

In 2021 Google’s profit was: $76 billion
ACCOUNTING
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Sakir saiyed
Sakir saiyed
@sakir_saiyed_
@vinaytalwar It’s ratio of

Market Cap/10 Year Free Cash Flow

For example

Hikal

Hikal = MCap / FCF~10Y = 5618 / 748 ~= 7.5
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Techno Funda Investing
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Thread Threadexplaining #PE Ratio & #PEG Ratio & its use in #FundamentalAnalysis

(Must read for #FA learners)

🙏Like & RT to spread learning with all🙏

Views Welcome👉@dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia

#FundamentalAnalysis #StockMarket


1⃣

Price to Earnings (#PE) ratio, also known as price multiple or earnings multiple is the ratio obtained by dividing the current share price by earnings per share (#EPS).

#StockMarket #Investing #FundamentalAnalysis


2⃣

P/E ratio is a reflection of the market's opinion of the earnings capacity & future business prospects of a company.

Companies which enjoy high investor confidence & have a higher market standing usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

3⃣

On the face, it would seem that companies with low P/E ratios would offer most attractive investment opportunities. This is not always true.

Companies with high current earnings but dim future prospects often have low P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

4⃣

As an #investor your primary concern is with future prospects of a company & not so much with its present performance.

This is why companies with low current earnings but bright future prospects usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis
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Brian Feroldi
Brian Feroldi
@BrianFeroldi
Accounting is the language of business.

If you buy stocks, you MUST learn how to read a Cash Flow Statement.

Here’s everything you need to know:

The cash flow statement shows how cash moves in and out of a company over a period of time.

The most common time periods are:
▪️1 Quarter
▪️1 Year
▪️Year-to-date (usually 6 or 9 months)

The time period is at the top. Here's $NFLX recent cash flow statement time period.


Some companies show the cash flow statement in their earnings press release, but many don’t.

You can find the cash flow statement by looking at:
▪️10-Q (Quarterly Report)
▪️10-K (Annual Report)
▪️Fnancial aggregators such as @theTIKR,
@CMLviz, @themotleyfool, @YahooFinance


There are three main segments to a cash flow statement.

1. Operating Activities
2. Investing Activities
3. Financing Activities

Companies get some leeway with how they breakout each segment, but they all follow this basic structure.


Let’s start with Operating Activities.

This segment STARTS with net income (the bottom number of the Income Statement).

It shows cash movements from all normal operational business activities.
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राम-रावण युद्ध समाप्त हो चुका था। जगत को त्रास देने वाला रावण अपने कुटुम्ब सहित नष्ट हो चुका था।श्रीराम का राज्याभिषेक हुआ और अयोध्या नरेश श्री राम के नेतृत्व में चारों दिशाओं में शन्ति थी।
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माता सीता भी हनुमान को पुत्रवत मानती थी। अत: हनुमान अयोध्या में ही रह गए ।राम दिनभर दरबार में, शासन व्यवस्था में व्यस्त रहते थे। संध्या को जब शासकीय कार्यों में छूट मिलती तो गुरु और माताओं का कुशल-मंगल पूछ अपने कक्ष में जाते थे। परंतु हनुमान जी हमेशा उनके पीछे-पीछे ही रहते थे ।


उनकी उपस्थिति में ही सारा परिवार बहुत देर तक जी भर बातें करता ।फिर भरत को ध्यान आया कि भैया-भाभी को भी एकांत मिलना चाहिए ।उर्मिला को देख भी उनके मन में हूक उठती थी कि इस पतिव्रता को भी अपने पति का सानिध्य चाहिए ।

एक दिन भरत ने हनुमान जी से कहा,"हे पवनपुत्र! सीता भाभी को राम भैया के साथ एकांत में रहने का भी अधिकार प्राप्त है ।क्या आपको उनके माथे पर सिन्दूर नहीं दिखता?इसलिए संध्या पश्चात आप राम भैया को कृप्या अकेला छोड़ दिया करें "।
ये सुनकर हनुमान आश्चर्यचकित रह गए और सीता माता के पास गए ।


माता से हनुमान ने पूछा,"माता आप अपने माथे पर सिन्दूर क्यों लगाती हैं।" यह सुनकर सीता माता बोलीं,"स्त्री अपने माथे पर सिन्दूर लगाती है तो उसके पति की आयु में वृद्धि होती है और वह स्वस्थ रहते हैं "। फिर हनुमान जी प्रभु राम के पास गए ।
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1) Core attributes of a promising founder worth following:
- Progress/trajectory over time
- How well they lead a team &
- Make the vision happen
- Most impressed when someone is way ahead of where you thought they would be when you check up/see them a few months later.

2) Indie Makers have such a benefit of being small, fast, nimble workers in comparison to big companies.

We can easily pivot and vastly change a project of ours. We can change as we learn more about our users.

Big companies can take months/years for even the smallest of pivots.

3) Before you find a product market you can pivot your project as many times as necessary until you find something that works.

Then you only have one thing to do: scale, scale, scale.

4) Be obsessed with the little details.
- listen to every single person who uses your product
- reply to every single person who emails you about your product
- ask them what they like and do not like
- iterate your product, make changes, pivot if necessary

5) Paul Graham's (@paulg) name came up with a feeling of great admiration! Naturally! It was Paul who said:

In the early stages of a company just;
- write code
- talk/sell to customers to stress test your idea

Nothing else.
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क्या आप जानते हैं कि क्या है, पितृ पक्ष में कौवे को खाना देने के पीछे का वैज्ञानिक कारण!

श्राद्ध पक्ष में कौओं का बड़ा ही महत्व है। कहते है कौआ यम का प्रतीक है, यदि आपके हाथों दिया गया भोजन ग्रहण कर ले, तो ऐसा माना जाता है कि पितरों की कृपा आपके ऊपर है और वे आपसे ख़ुश है।


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शायद हम सबने अपने घर के किसी बड़े बुज़ुर्ग, किसी पंडित या ज्योतिषाचार्य से ये सुना होगा। वे अनगिनत किस्से सुनाएंगे, कहेंगे बड़े बुज़ुर्ग कह गए इसीलिए ऐसा करना

शायद ही हमें कोई इसके पीछे का वैज्ञानिक कारण बता सके।

हमारे ऋषि मुनि और पौराणिक काल में रहने वाले लोग मुर्ख नहीं थे! कभी सोचियेगा कौवों को पितृ पक्ष में खिलाई खीर हमारे पूर्वजों तक कैसे पहुंचेगी?

हमारे ऋषि मुनि विद्वान थे, वे जो बात करते या कहते थे उसके पीछे कोई न कोई वैज्ञानिक कारण छुपा होता था।

एक बहुत रोचक तथ्य है पितृ पक्ष, भादो( भाद्रपद) प्रकृति और काक के बीच।

एक बात जो कह सकते कि हम सब ने स्वतः उग आये पीपल या बरगद का पेड़/ पौधा किसी न किसी दीवार, पुरानी

इमारत, पर्वत या अट्टालिकाओं पर ज़रूर देखा होगा। देखा है न?

ज़रा सोचिये पीपल या बरगद की बीज कैसे पहुंचे होंगे वहाँ तक? इनके बीज इतने हल्के भी नहीं होते के हवा उन्हें उड़ाके ले जा सके।
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Ok, it's high time to look at the REAL effects of Brexit. As the Tories implode & Labour sits on its hands, companies are executing contingency plans, shifting jobs & assets, slashing investments, or redomiciling (accounting exercise). Happening NOW, not in a fantasy future. 1/95

Barden Corporation is closing down its Plymouth factory after 51 years, putting 400 jobs at risk, as its parent company Schaeffler shifts production to various sites outside the UK due to Brexit.

8 health providers have warned of medicine shortages in the event of a no-deal Brexit: "we do not believe that the current medicine supply plans will suffice, and we will have widespread shortages if we do not respond urgently."

Pfizer - $100 million on Brexit prep: "Pfizer’s preparations are well advanced to make the changes necessary to meet EU legal requirements after the U.K. is no longer a member state, especially in the regulatory, manufacturing and supply chain areas."

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Filippo Valsorda
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@FiloSottile
“We don’t negotiate salaries” is a negotiation tactic.

Always. No, your company is not an exception.

A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.

Listen to Aditya


And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.

I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.

You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.

Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
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