Jacksonville CPA | Basically the best in the business
Oh, hello everyone and welcome back. This is branded mcelroy talking to you about forecasting here in these few segments. So, um, if you’re Jacksonville CPA is not giving you the forecast you need to achieve your financial goals, then give them an eva call so we can help you out. Okay? So
you know, when would she have all the elements you need for your forecast? You continue to build it across a spreadsheet for all of the months. You can forecast by quarter or six months or maybe even a year, but a year as the year progresses, you’ll have your, your actual numbers and you need to go back and drop in that, those actual numbers, okay? And you, you have to reforecast. You know what, I’ve seen successful companies that use this method, they forecast the future. So if you have a Jacksonville CPA that does not getting you the results, give them any of our call. Okay? This, this job should take you less than an hour each month, okay? When you really become good at, it may only take 15 minutes or so, okay? You can drive your calculations, your gross profit by forecasting your sales and your gross profit percentage. Okay? This model calculates cost to goods sold, gross profit dollars by inputting target gross profit percentage. Okay? All of your operating expense categories are easy to predict. Okay? It’s just looking backwards. We’ll tell you what the future’s going to be unless you decide to cut cost or something like that. But
um, your payroll, your Labor should be the easiest to predict since it is a function of your staff structure. No predicting cashflow is where a lot of people go wrong. Your accounts receivable is driven by the manual input of days sales outstanding, which I’ll explain in a moment. You could easily put your input, your payables, based on your past history with your vendors. Okay? So if you have a Jacksonville CPA or if you don’t have a Jacksonville CPA, then give them a call. Okay? So capital injections, distributions are all, all also input cells. So I hope that I’ve convinced you that you should only take tax distributions until you hit your core capital target or basically your emergency fund for businesses. So I’ve seen so many business owners eat all of their profits with a,
uh, higher than sustainable lifestyle. Okay? So if you’re taking out too many cash distributions, then you’re not going to be able to hit your targets like you need to hit them. Okay? So if you’re a Jacksonville CPA is not giving you the service you need, then give me a call so we can help you with these things. Okay. So, um, and talking about these financial forecasts, we’d have to talk about metrics. Okay? So what are metrics, metrics or percentages and in a different indicators that we have to keep good track of. So once your, your forecast is complete and create your metrics, it’s a metric is more than about movement than it is about the number itself. Okay? If you take a specific metric and compare it to another company, you need to make sure it’s calculated the same way. It means the same thing for your industry. It’s more important to set and exceed your own company goals. Okay? And then worry about others. The first thing which we’ve talked about before we need to focus on is labor efficiency. This represents the productivity of your employees. There will be some high points and some low months,
you know, you need to calculate it. At least they were efficiency on a month to date and year to date basis so you can identify trends. Okay? Next is accounts receivable days sales outstanding, which is your accounts receivable divided by your average daily sales. Okay, here’s a simple calculation. Take this month’s revenue, multiply it by 12 and divided it by three 65. It gives you your average daily sales to get your dale days sales outstanding, your end of month receivable balance and divide that by your average daily sales. Okay? Be careful here because this metric is not always calculated the same way. Okay? If you’re using yearly data, it’s going to be distorted if the business goes through seasonal or other cycles. I prefer to look at the last two months of revenue to come up with the average daily sales number. Okay, so Jacksonville CPA, accounts receivable generally falls over a couple of month period, so you can forecast these average daily sales either too high or too low depending on whether or not you’re in a high season or low season. So if you’re in the second month of the year, great. Your daily sales number by averaging two months, whatever method you choose, just use it consistently. Okay? Uh, another critical measurement is the measurement of a core capital. So what is core capital? It’s basically two months of operating expenses in cash with nothing drawn down on your line of credit.
So if you count operating expenses, your core capital. Now we’ve talked about freight expenses, Jacksonville, CPA and cost of good sold. Okay. You can either choose to use the operating expenses, which is going to be a much lower number or a cost of goods sold number. Uh, I’ll, I’ll say that the more cash you have on hand say for your business is going to be from emergencies in downturns. So you know, if you have a trade support for your cost of good sold,
no, that means that the, the subcontractor or whatever is willing to get paid when you get paid, then no. Then by all means just to have two months worth of operating expenses. If this is not the case, then include the costs of good sold on your emergency fund projects. Sure. Okay. So you continue keeping a tight eye on these numbers and driving for the numbers that you want to get. Okay. Jacksonville, CPA. Well we thank you for joining us today and we hope you Jordan. I’m the Neva Jacksonville accounting firm that’s going to help you achieve your financial goals.