The Boulder Business Podcast: Recent Episodes
Ryan Beckenhauer
I started this podcast to connect the Boulder Business Community together by highlighting important local business figures, issues and businesses alike.
John Tayer, from the Boulder Chamber of Commerce goes over the recovery framework for Boulder's economic activity and how the whole community can get involved to help!
I sat down with Mark Casey to talk about Subletting. For small businesses, you may run into this as your space needs change or you are looking to get into some space and do not want to sign for a longer term.
I sat down with John Tayer, CEO of the Boulder Chamber, to find out what a Chamber is and how local businesses can engage with their local chapter!
This episode dives into an important financial statement called the Profit and Loss Statement, sometimes referred to as the P&L or Income Statement.
I break it down into three parts: Why we call it a Profit and Loss Statement, How it's structured and How it's useful to business owners for overall strategy and operations.
An income statement is structured as follows: Revenue (top line) COGS (Cost of Goods Sold) Gross Profit Expenses Net Income (bottom line)
I mentioned there are 4 major "landmarks" in the cash cycle, they are as follows:
- Raw materials purchased (on credit, A/P or Accounts Payable created)
- Pay your Suppliers ( A/P or Accounts Payable)
- Sell Finished Goods to Customers( on credit, A/R or Accounts Receivables created)
- Collect cash from clients (A/R or Accounts Receivables)
Asset Management Ratios:
DSI - Days in Inventory = Inventory over COGS/365 * This is time between #1 above and #3 above or how long it takes you to "flip" inventory.
DSO - Days Sales Outstanding = A/R over Annual Net Sales/365 *This is the time from #3 above to #4 above or the time it takes you to collect your A/R from your customers.
DPO - Days Payable Outstanding = A/P over COGS/365 * This is the time from #1 above to #2 above or how long it takes you to pay your suppliers.
Cash Cycle = DSI +DSO - DPO
- Remember, the cash cycle represents ho long you are using your cash. The longer the cash cycle the more you'll be dependent on lending and vice versa.
Any other questions? Please put in the comment section!
This episode dives into one of the most important financial statements, the balance sheet. I explain why it's called a balance sheet, how a balance sheet is structured and certain things a balance sheet can tell you about your business.
Why is it called a Balance Sheet? In my example, I compared it to buying a home. It looks like this: 100 = 90 + 10 where the 100 is the asset (your home) and the 90 (liability to lender) and 10 (your equity). Assets = Liabilities + Equity
The structure of a Balance Sheet: Assets Liabilities Equity
Liquidity Ratios:
Current Ratio = Current Assets/Current Liabilities
*A current ratio will let you know whether your business will be able to meet it's short term obligations. A current ratio of less than 1 means that your business will NOT be able to meet it's short term obligations. The best current ratio is between 1.2 -2. If you have a current ratio higher than 2, you may not be managing your assets in the best manner.
Quick Ratio = Current Assets - Inventory/Current Liabilities
- A quick ratio takes out inventory and will give you a much clearer picture on how "liquid" your business really is.