corporate advisory division financial ration’s – using ratios and benchmarking to improve club...
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CORPORATE ADVISORYDIVISION
Financial Ration’s – Using ratios and benchmarking to improve club performance Tony Hood B.Ec C.A.
M.B.A
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Ratio Analysis and BenchmarkingWhat are they?
- Relevant, meaningful ratios that provide insight into running the enterprise. Not usually absolute, rather the trend that matters
- Aged creditor ledger or Creditor days of 45? - Benchmark/ others or yourself. How relevant is Mt Pritchard to your
club?
Where do we start?
- Bank covenants. Times Interest Cover, Debt to Equity- Cash management ratios: Creditors Days, Stock Turn
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Ratios that some clubs report on………but
Gearing Ratio : Measures the percentage of Capital employed that is financed by debt and long term finance
Current Ratio : An indication of a club’s ability to meet short term debt
Liquidity Ratio : as per current ratio but excluding stockEquity Ratio: Indicates the level of leverage used by a clubWorking Capital Ratios Stock Turn ( I prefer stock days/creditor days and debtor days)
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Cash Flow Industries Pty Ltd
Cash Flow - Notes to the Accounts
Operating Profit -
Non-cash flows in operating surplus/(deficit)Depreciation XProfit on Sale of Plant & EquipmentLoss on Sale of Plant & EquipmentDoubtful Debts
Changes in assets and liabilities(Increase)/Decrease in Receivables - (Increase)/Decrease in Stock - (Increase)/Decrease in Prepayments - (Increase)/Decrease in Intangibles - Increase/(Decrease) in Payables - Increase/(Decrease) in Income in AdvanceIncrease/(Decrease) in Monies held in TrustIncrease/(Decrease) in Employee Entitlements
Cash flows from operations -
Cash Flow Statement
Cash flows from operating activitiesReceipts from customers - Payments to suppliers and employees -
- Interest expense - Net cash provided by (used in) operating activities -
Cash flows from investing activitiesProceeds from sale of property, plant and equipmentPurchase of property, plant and equipment - Net proceeds/(repayment) of loans to other entities - Net cash provided by (used in) investing activities -
Cash flows from financing activitiesNet proceeds/(repayment) of borrowing's - Net cash provided by (used in) financing activities -
Net increase / (decrease) in cash held - Cash at beginning of the financial year - Cash at end of financial year -
Reconciliation to Cash at bankPetty Cash - Overdraft -
-
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Other ratios
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Ibis World May 2010 Industry Report2009-10
Revenue : Liquor 21.6%, Gaming 56.1% Food 9.8%Revenue per employee $142,200Wages/ Revenue 25.72%Average Wage $36,569
Gaming Staff: 33% FT, 18% PT, 48.5% casual
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Industry Costs ( as per Ibis World)
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Key Issues in your club may include:•Stock Control•Minimisation of wastage•Control over labour inputs and costs (particularly FT v PT and casual).•Membership numbers, activity, duration, yield•F&B, Membership, Gaming, other if any
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Month Total Income Fiscal Year 12mth RunningBalance
Jul-07 593,716 Aug-07 492,995 Sep-07 204,198 Oct-07 224,740 Nov-07 306,128 Dec-07 167,409 Jan-08 796 Feb-08 302,845 Mar-08 231,354 Apr-08 144,976
May-08 335,929 Jun-08 241,460 3,246,545 3,246,545 Jul-08 325,692 2,978,522
Aug-08 191,647 2,677,174 Sep-08 151,269 2,624,244 Oct-08 300,694 2,700,199 Nov-08 308,867 2,702,938 Dec-08 423,073 2,958,601 Jan-09 2,691 2,960,497 Feb-09 418,882 3,076,533 Mar-09 245,260 3,090,439 Apr-09 70,940 3,016,404
May-09 290,743 2,971,219 Jun-09 207,254 2,937,012 2,937,012 Jul-09 344,959 2,956,279
Aug-09 368,801 3,133,433 Sep-09 390,710 3,372,874 Oct-09 362,517 3,434,697 2,500,000
2,600,000 2,700,000 2,800,000 2,900,000 3,000,000 3,100,000 3,200,000 3,300,000 3,400,000 3,500,000
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2006
2007
2008
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What others do….
•Customer counts at relevant venues•Assessment of competitors actions and strategies•Knowing thyself and knowing they enemy
•Use of sampling for knowledge
•Research monitoring (White/Blue)
•Analysis of Market 10- 3, 3- 9, Saturdays etc
•Wastage reports, rules for waste stock