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Reading the numbers

For owners and managers: what a set of accounts is telling you about profit, cash and how hard the money in the business is working.

Medium4 of 4 modules open19 rooms
Module 1

Profitability

Is the business making enough from what it sells? Margins, mark-up, return on capital and where the money goes.

  1. 1How to work out gross profit margin8 min, easy
  2. 2How to work out net profit margin10 min, easy
  3. 3Mark-up is not margin10 min, medium
  4. 4How to work out return on capital employed10 min, medium
  5. 5How to read expenses as a share of sales10 min, medium
Recap this moduleSix questions, starting with the ones you got wrong.
Module 2

Liquidity

Can the business pay what it owes in the coming months? The current ratio, the quick ratio, working capital and what they mean.

  1. How to work out the current ratio9 min, easyPremium
  2. How to work out the quick ratio10 min, mediumPremium
  3. What working capital is10 min, mediumPremium
  4. How to read a liquidity ratio10 min, mediumPremium
Module 3

The working capital cycle

How long cash is tied up between paying a supplier and being paid by a customer, counted in days, and how to shorten it.

  1. How long customers take to pay9 min, easyPremium
  2. How long you take to pay suppliers9 min, easyPremium
  3. How long inventory sits9 min, mediumPremium
  4. How to work out the cash cycle10 min, mediumPremium
  5. How to shorten the cash cycle10 min, mediumPremium
Module 4

Cash flow

Profit does not pay the bills, cash does. Build a cash budget month by month, spot a shortfall early and decide what to do.

  1. Profit is not cash: why the two differ9 min, easyPremium
  2. How to build a cash budget10 min, easyPremium
  3. When receipts and payments land10 min, mediumPremium
  4. Closing balances and overdrafts11 min, mediumPremium
  5. What to do about a cash forecast10 min, mediumPremium