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Durable Results

Durable Results. Transform Your Business By Simplifying Your Metrics. Presented by Don Davis. Introduction. Release Your Inner Bean Counter Simplify your Financial Statements and Drive Improved Results Understand the Impact of Metric Management. Agenda. Cash Flow as the Ultimate Metric

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Durable Results

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  1. Durable Results Transform Your Business By Simplifying Your Metrics Presented by Don Davis

  2. Introduction • Release Your Inner Bean Counter • Simplify your Financial Statements and Drive Improved Results • Understand the Impact of Metric Management Duckridge Advisors

  3. Agenda • Cash Flow as the Ultimate Metric • How Your Financial Statements Fit Together • What Metrics Are Best For Your Business • Industry Examples • Lincare, Invacare, American Home Patient • Using Ratio Analysis for Quick Review Duckridge Advisors

  4. Cash Flow:The Ultimate Metric “Too often we measure everything and understand nothing. The three most important things you need to measure in a business are customer satisfaction, employee satisfaction, and cash flow. If you’re growing customer satisfaction, market share is sure to grow, too. Employee satisfaction feeds you productivity, quality, pride and creativity. And cash flow is the pulse -- the key vital sign of a company” Jack Welch - former CEO, GE Duckridge Advisors

  5. Quick Primer on Cash Flow Information Available in Your Monthly Financial Statements

  6. Cash Flow Statement Financial StatementsThe Three Pillars Earnings Statement Balance Sheet Cash AR Rental Equipment Total Assets AP & Accruals Debt Total Liabilities Equity Total Liabilities & Equity Sales Cost of Sales Gross Profit Operating & Admin EBIT Interest & Taxes Net Income Net Income Change in Working Capital Cash from Operations CAPEX Cash from Financing Activities Cash Duckridge Advisors

  7. Duckridge Advisors

  8. What Are Most Effective Cash Flow Metrics? • Daily Cash Report • How Much Cash Did You Begin the Day With? • How Much Cash Came In? • How Much Cash Went Out? • How Much Cash Do I Have at End Of Day? • Month End Cash Flow Statement • Compare to Prior Months for Orientation • Develop Sales Converted to Cash Orientation Duckridge Advisors

  9. Simplify Your Metrics Drive Results • Compare • Either versus prior year or prior months • The more comparison points the better • Summarize • Always have a one page summary prepared. • Use the summary to evaluate the detail • Divide • Use ratios to your advantage • Benchmark yourself against yourself Duckridge Advisors

  10. Industry Examples • Quick Snap Shot of Publicly Traded Industry Leaders • Focus on Simplicity and Relevancy • Incorporates the Idea of Compare, Summarize and Divide • What Other Metrics Would You Add? Duckridge Advisors

  11. Gross Margin EBIT Margin Sales Converted to Cash Sales by Employee Payroll to Sales Other Identified Costs to Sales Days Sales Outstanding Inventory Turns Gross Margin by Product Line Quick Ratios Debt to EBITDA Debt to Equity Key Ratios Balance Sheet Cash Flow P&L

  12. Gauging Sales by Employee Per Steven Richards & Associates, Inc

  13. Major Players: Sales, PROFIT & Cash per Employee Duckridge Advisors

  14. DSO: a Matter of Opinion? Per Steven Richards & Associates, Inc

  15. DSO:The Assorted Math • Calculations Differ by Organization • Some use rolling average • Some annualize • Timing of Write-offs Has Impact • What Impact Does a Day Mean? Duckridge Advisors

  16. DSO:The Assorted Math Duckridge Advisors

  17. DSO:The Assorted Math Timing of Write-offs Matter Duckridge Advisors

  18. DSO:The Assorted Math What Is A Day Worth? Duckridge Advisors

  19. So What? • Summarize, Compare and Divide For High Level Review • Establish Your Own Metrics • Quick Summaries allow for Quick Reviews for Busy Executives • Different Comparisons provide Different Points of View • Focus on Cash Duckridge Advisors

  20. Transform Your Business By Simplifying Your Metrics • Daily Cash Report • Monthly Review of Cash Flow • Sales converted to Cash • Compare all Metrics • Prior Months • Prior Year to Date • Budget Duckridge Advisors

  21. Where to Get More Information • Get remote electronic access to your Financial Reporting Software and Explore • Learn more about your own Company by Understanding Your Industry Leaders • www.sec.gov/edgar.shtml • Click on Search for Company Filings • Focus on 10-K Annual Reports • Contact me at ddavis@duckridge.com or 412-805-0662 Duckridge Advisors

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