The document discusses presenting financial statements clearly through balance sheets, current financial reports, forecasts, and dynamic models. It provides tips for each: 1) For balance sheets, focus on liquidity, changes in cash, timing of assets/liabilities, and key line items and ratios. 2) Current reports should include a financial dashboard and template-driven monthly reports with relevant charts. 3) Forecasts should answer "what if" questions and have the same format as reports, with assumptions driving the model. 4) Dynamic models allow real-time analysis of changes and are best for communicating forecast updates.

1. Presenting Your Financial Statements So you can communicate your financial results clearly and elegantly. 2009

7. The liquidity issues Equity Liabilities Assets

8. The changes in cash

9. The timing of assets and liabilities Equity Non current assets Current liabilities Non current liabilities Current assets

10. The individual line items and ratios

12. Poorly designed reports may mask financial fraud Will be overstated Equity Liabilities Will be wrong Will be understated Assets

15. Question -- What numbers do you look at first? Net worth Cash flow Working capital Act vs. plan/std Cash EPS Profits Sales

16. Question -- What numbers do they look at first? 2 1 3 4 Banker Net worth 2 2 Cash flow Working capital 3 Act vs. plan/std 1 1 4 Cash 3 EPS 4 2 Profits 4 3 1 Sales Investor Dir Empl

18. Financial dashboard 123 127 127 127 Headcount 2,820 2,853 3,487 4,982 Receivable position 2,257 2,257 2,257 2,750 Backlog 6 7 8 8 Open to hires 1,212 512 0 0 Booked this month 1,013 946 812 807 Billed this month 12.3 12.2 11.7 10.2 Cash position Wk 4 Wk 3 Wk 2 Wk 1

21. Measure p/l variances Note – negative variances are “bad”, positive are “good”

22. Measure sales performance N $3m E $4m S $1m W $2m

23. Monitor changes in sales forecasts Waterfall chart Actual compared to Plan/Fcst Plan Fcst Act 8 10 9 10 10 May 40 8 7 8 9 A Act/Fcst 42 8 7 8 9 M Act/Fcst 44 9 9 8 9 F Act/Fcst 49 10 10 10 9 J Act/Fcst 50 10 10 10 10 Plan Tot Apr Mar Feb Jan

24. Track developer performance Product release calendar

25. Review f&a performance Collection history

26. Show balance sheet strength

27. Analyze balance sheet components 1,050 Deferred revenue 1,187 105 Accrued liabs 32 Accts payable Bal

36. Put these charts in your business plan .

39. Dynamic model graphs

41. Question – which assumptions are the most significant? $100,000 18% 60% $3,000 35 days 50 days $350,000 35% $30,000 8% 15% 91% PLAN Sales performance vs. quota Executive compensation Interest rates paid % of equipment purchases financed Spending on new computers for each hire How fast we pay creditors How fast customers pay Spending on marketing programs % of R&D costs capitalized Annual travel expenses Commission rates Annual maintenance fees

42. Here are the most significant assumptions -2 -- -1 -- -16 -55 -5 +2 -1 +2 -3 -2 $ effect on cash of a (10%) dif One quarter 2 1 Rank Annual -7 -1 -3 -2 -14 -75 -18 +6 -6 -10 -26 -127 $ effect on cash of a (10%) dif 2 1 Rank PLAN 91% Sales performance vs. quota $100,000 Executive compensation 18% Interest rates paid 60% % of equipment purchases financed $3,000 Spending on new computers for each hire 35 days How fast we pay creditors 50 days How fast customers pay $350,000 Spending on marketing programs 35% % of R&D costs capitalized $30,000 Annual travel expenses 8% Commission rates 15% Annual maintenance fees

44. Cash forecast

45. Cash forecast