72 lines
2.4 KiB
Org Mode
Executable file
72 lines
2.4 KiB
Org Mode
Executable file
#+title: Section 7 | Lesson 40 - Forecasting, Budgeting, Fiscal Year
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#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/business.css" />
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* Links
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- [[./../mba-main.org][TOC | Business]]
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- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4282974#overview][S07:L40 Forecasting, Budgeting, Fiscal Year]]
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* Notes
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How do companies make budges
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How do they forcast
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** How do companies make budgets
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*** Forecasting is always based on a percentage of sales.
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- forecast what your sales are going to be
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- everything else is just a percent of revenue
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*** when companies forecast
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- Public companies forecast quarterly
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- Startups forecast monthly
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- survival is the goal
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- most startups collapse
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*** Fiscal years
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- companies note when a season ends
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- companies also regard their years as "ending" on a different months
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- some companies end on black friday
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- this is when they make their most money
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- japanese companies end in march
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** Ethics
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- be conservative and honest with forecasts
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- some companies try to take from a different quarter to make up shortfalls
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- jailtime
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- it's easy to make clerical mistakes
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- overlook unethical co workers
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** time to turn asses into cash
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*** Cash Conversion Period Ratio
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- when do we get PAID baby?
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- *COGS*: Cost of Goods Sold
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- how much it costs for goods for the day
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**** example
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- $5000 of inventory
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- COGS is $50
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- we have 100 days worth of goods
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if we put $1 into inventory it won't be converted into cash for another 50 days
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*** Inventory to sale conversion period
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- measures on a yearlly bases how long it takes to turn inventory to cash over a year
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- you can also do this by season, just replace 365 days with 90 days
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#+NAME: inventory_to_sale_conversion
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\[
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\text{ISCP} = \frac{\text{average inventories}}{\text{COGS} \times 365}
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\]
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** time to turn credit (not assets) into cash
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- when selling product on credit, how long does it take to turn it into cash
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#+NAME: sales_to_cash_conversion
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\[
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\text{Sales to Cash Conversion Period} = \frac{\text{Average Receivables}}{\text{Sales}} \div 365
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\]
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** time to pay your bills as late as possible
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- Purchase to Payment Conversion Period
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- pay your bills as late as you can
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#+Name: purchase_to_payment_conversion
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\[
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\text{Purchase to Payment Conversion Period} = \frac{\text{average payables} + \text{average accrued liabilities}}{\text{COGS} \times 365}
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\]
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