How the King manages the Balance sheet considering the various decisions that the King has to make and when those decisions are required to be made

1. The Kings role
The power of the King in creating of destroying wealth
in Financial statements

2. Our Characters
Revenue is Vanity
Profit is Sanity
Cash is King

3. The 3 Characters to the financial
statements
How each character influences decisions directly impacts the
performance of the financial statements
Today we will focus on the King, determine how the King should
manage the way we transform making money into creating wealth
within our financial statements

4. The roles
Revenue is Vanity
Primary responsible for the
performance of the income
statement or what we call the
money making machine
Profit is Sanity

5. The King
Primary responsible for the
performance of the balance sheet
or what we call the wealth creation
engine

6. The Kings domain

7. How the King views the wealth creation
engine
Cash on hand
Must be the
same value at all
times
Accounts receivables + Inventories –
accounts payable – other non interest
bearing debt +other assets
All interest bearing debt both short term
and long term including lease capitalized
debt
All equity including share capital, retained
income and other equity instruments

8. The King provides
resources to make more
money

9. The additional resources are
funded with debt and equity

10. Vanity and Sanity want to make more money
through automation
To increase profitability
Vanity requires a new
automated distribution
system cost 100,000
Non cash resources increase
by 100,000

11. The Kings decision
Funding can either come from
existing cash resources or from
additional equity or from
additional debt

12. The Kings decision – existing cash
resources
-100,000
+100,000
The value of
the
investment
component
stays the same

13. The Kings decision does not want to use existing cash resources
+100,000
+100,000
Equity can come from the additional profit derived from the automated
system but that will only happen over time so the King has to use other
peoples money

14. The Kings decision the consequence
+100,000
Using other people money
has the potential of
increasing risk

15. The Kings decision the consequence
+100,000
To mitigate risk the King has
to ensure that he makes
money from other peoples
money

16. Decisions ……decisions
Use cash resources
…wealth is created with rapid cash
replenishment
-100,000
Risk
None required
+100,000

17. Decisions ……decisions
Or a combination of both
…wealth is created by minimizing risk
-50,000
+100,000
+50,000

18. Decisions ……decisions
Use other peoples money
…create wealth by making more money than
the cost of other peoples money
Risk
+100,000
+100,000

19. Coming soon
Start the conversation
“how do you improve profit,
cash and returns for my
business”
Presented By Global Financial Bridge
www.gfbridge.com
Mick Holly
mholly@gfbridge.com
Andre Gien
agien@gfbridge.com