1. 2016 Kalmbach Feeds Agribusiness Conference The Importance of Keeping Score A step by step guide through your financial statements and how to evaluate the results

2. 2016 Kalmbach Feeds Agribusiness Conference Two key questions 1.Are you winning right now in your business? 2.Do you have a vision for your financial success over the next one, three, or five years ?

3. 2016 Kalmbach Feeds Agribusiness Conference Keeping score in sports – Why? Competition Excitement and Adrenaline Search for winners Drive us to get better

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5. Score in business? Competition Winners and losers Drive to succeed The scorecard for business is PROFITABILITY

6. 2016 Kalmbach Feeds Agribusiness Conference Importance of keeping score Are you winning Resources for opportunities Where can you improve

7. 2016 Kalmbach Feeds Agribusiness Conference How do you keep score Cash in your bank account Accountant tells you Sales are good You can pay your bills

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9. Financial Statements = Scorecard Overview of what you accomplished Snapshot of what resources are available Demonstrate areas of improvement Opportunity for setting your financial vision

10. 2016 Kalmbach Feeds Agribusiness Conference Keys to useful financial statements Accurate Timely Complete Analyzed

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12. Income statement: Accomplishment RevenueHow much did I sell? - Cost of Goods Sold Purchases, raw materials, direct labor, other direct costs = Gross ProfitMargin available to cover my fixed costs - OverheadSalaries, building, utilities, other overhead - Interest & TaxesBank interest and taxes = Net IncomeScorecard for your business last period

13. 2016 Kalmbach Feeds Agribusiness Conference Balance sheet: Resources for future AssetsLiabilities & Equity CashAccounts Payable ReceivablesShort Term Debt InventoryAccrued Expenses Prepaid ExpenseOther Obligations Real EstateLong Term Debt EquipmentShareholders Equity Vehicles

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15. Cash is king! Lifeline of your business Track cash on a weekly or daily basis Carefully watch accounts receivable Reserves to respond to opportunities and challenges

16. 2016 Kalmbach Feeds Agribusiness Conference Analysis of your scorecard Analysis uncovers opportunities and challenges Types of analysis Financial ratios Benchmarking Year over year comparisons Simplicity is best

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18. Revenue Analysis YoY revenue growth Revenue benchmark: compared to competitors or industry Revenue source: New customers or current customers New products or existing products Higher selling prices or more units sold Change in average transaction

19. 2016 Kalmbach Feeds Agribusiness Conference Expense Analysis Expenses as a percentage of revenue: Compared to last year or benchmark Gross profit YoY as a percentage of revenue Compared to competitors or industry Change per unit or customer Carefully review overhead

20. 2016 Kalmbach Feeds Agribusiness Conference Balance Sheet Analysis Current Assets / Current Liabilities: Cash required to pay current debts Total Assets / Total Liabilities: Assets required to pay future debts Average Receivables / Sales * 365: Days of sales outstanding Sales / Average Inventory: Speed of selling inventory

21. 2016 Kalmbach Feeds Agribusiness Conference What is the analysis telling me about my business?

22. 2016 Kalmbach Feeds Agribusiness Conference Vision for your finances Are you winning financially in your business? In the last 12 months how many times did you review your previous months financial performance? Do you have a vision for your financial success over the next one, three, or five years?

23. 2016 Kalmbach Feeds Agribusiness Conference Examples of vision 10% growth in profit each year for the next three years Grow sales by 5% each year Cut overhead expense by 3% each year Get out of debt by 2020 Build $500,000 reserve for future opportunity Increase inventory turns from 5 to 6 Increase average transaction size by $10

24. 2016 Kalmbach Feeds Agribusiness Conference To the person who does not know where he wants to go there is no favorable wind