Leading from the front Dare to Dream

Prepared By:

Engr.Md.Rukanuzzaman
Senior Manager (Gas Stove)
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Need to synchronize below point as a successful leader…
Dream

1. Positive mind set.

2. Leadership & Management.

3. Motivation & Inspiration.

4. Work place environment & Employee care.

5. Business sales & Customer service.

6. Lean Six Sigma.
7. Soft Skill.
8. Self improvement & Success.

Courtesy to Seema Chowdhury, Director, PRAN-RFL Group

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Some questions ask yourself daily…
Dream

1. Do you have growth mind set?

2. What are you doing to improve your working area continuously?

3. Are you to impart innovative ideas in your working periphery?

4. What are you doing to become the winner?

5. How are you challenging yourself?

6. Do you have high goals & aspirations?

7. Are you communicating & participating continuously?

8. Are you preparing yourself to avail the opportunity?

9. Are you ready to act & take accountability like an owner?

Courtesy to Seema Chowdhury, Director, PRAN-RFL Group

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A positive workplace is where employee are…
Dream

1. Caring & Thoughtful.

2. Appreciative, Logical & Responsible.

3. Honest, Helpful & Respectful.

Ask yourself regarding your workplace..
4. Accepting, Loyal & Non biased.

5. Dependable, Reachable & Consistent. 1. Do you have these quality in you?

6. Devoted, Committed & Invested. 2. Is your workplace a happy place to work at?

7. Emphatic, Trustworthy & Compassionate. 3. Are you ready to adapt, adopt & abort?

4. Do you want be a leader of change?

Courtesy to Seema Chowdhury, Director, PRAN-RFL Group

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Daily checklist of business owner…
Dream

1. Develop fast & reduce the cost to win in market.

2. Increase speed, quality & improve process.

9. Take drive to reduce inventory & be lean.
3. Find way to bring in savings & efficiency.
10. Take drive to reduce borrowing & liabilities.
4. Take ownership & be accountable.
11. Increase cash flow to run business smoothly.
5. Plan to grow 100% & bring positive result.
12. Do self analysis & be more impactful.
6. Think to work creatively & productively.
13. Take effective & damage control initiatives.
7. Focus on knowledge & skill development.
14. Do product & process development regularly.
8. Focus on activities & generate productive ideas.
15. Create an environment to encourage creativity?

16. Are you an asset or liability of your business?

Courtesy to Ahsan khan Chowdhury, Chairman & CEO, PRAN-RFL Group

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Some common report of factory operation..
Dream

1. Performance report.

2. Cost control & savings report.

3. HR status & reduction plan with salary capping.

4. Succession plan & multitasking people list.

5. Machine list & man to machine ratio.

6. Energy savings plan with deadline.

7. New product & business idea.

8. Six Sigma report.

9. Development point with deadline.
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Why leaders learn accounting?
Dream

A basic understanding of accounting and business

finance can help a leader..

Six business skills every leader need

1. To measure their work impact on revenue.

1. Communication.
2. To Control project cost.

3. To better understand of organization budget. 2. Management.

3. Problem Solving.

4. Business Operation.

5. Research & Critical thinking.

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Company financial performance?
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 The financial performance identifies how well a company generates

revenues and manages its assets, liabilities, and the financial interests of its
stakeholders.

 It tells investors about the general well-being of a firm. It's a snapshot of its
economic health and the job its management is doing.

 It should be evaluated based on a set of criteria that includes liquidity,

solvency, profitability, financial efficiency, and repayment capacity of
the firm.

 Evaluation of overall financial performance include the income statement,

balance sheet, and the cash flows statement.
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Articulation of financial statements
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Financial performance criterion?
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 Liquidity indicates the ability of the business to meet financial obligations (including principal and interest on
debt) when they come due. If the business do it without disrupting the normal operation, is an indication the
business is liquid.

 Solvency measures the ability of the firm to pay all debts if the assets of the business are sold. Generally, If the
value of total farm assets exceeds total farm liabilities, the farm is said to be solvent.

 Profitability is an indication of the level of income produced by the farm business and is measured in terms of
rates of return produced by the labor, management, and capital of the business.

 Financial efficiency measures the degree of efficiency with which labor, management, and capital are used in
the business. Efficiency indicates the relationship between inputs and outputs and can be measured in physical
or financial terms.

 Repayment capacity measures the ability of the business to repay existing debt commitments from farm and
nonfarm income, and it is closely related to the concept of liquidity.

Financial performance indicator.
 Gross profit: The amount of revenue made from sales after
subtracting production cost.
 Net profit: The amount of revenue from sales after
subtracting all related business expenses.
 Working capital: Immediately available or highly liquid
funds, used to finance day-to-day operations.
 Operating cash flow: The amount of money being
generated by regular business operations.
 Return on equity: Net income divided by shareholder
equity.
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 Current ratio: A measure of solvency—the total assets
divided by total liabilities.
 Debt to equity ratio: Company’s total liabilities divided by
its shareholder equity.
 Quick ratio: Calculates the percentage of very liquid current
assets (cash, securities, accounts receivables) against total
liabilities.
 Inventory turnover: How much inventory is sold within a
certain period, and how often the entire inventory was sold.
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How can be improved financial performance?
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Identify any roadblocks or friction points and the source of these problems is the first step. Other
strategies include:

 Improving cash flow by;

 keep better track of income/outgoes.
 step up collection of accounts receivable.
 Adjust payment options and prices if necessary.
 Selling unwanted/unused assets
 Revamping budgets
 Reducing expenses
 Consolidating or refinancing current debt;
 applying for government loans or grants.
 Analyzing financial statements and performance indicators.
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Income statement
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 Income statement, which summarizes results from business

operations—revenues, expenses, and profits or losses during a
specific period.

 The profit or loss is determined by taking all revenues and

subtracting all expenses from both operating and non-operating
activities.

 An income statement provides valuable insights into a

company’s operations, the efficiency of its management,
underperforming sectors, and its performance relative to
industry peers.
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Structure of income statement
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Revenue
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 Revenue is the total amount of money generated by the sale of goods and services
related to the primary operations of the business.

 Revenue can be divided into operating revenue & non operating revenue.
“A company can earn record-
 high revenue and still report a
Operating revenue is sales from a company's core business.
negative profit.”

 Non-operating revenue which is derived from secondary sources (such as sale of …MD RFL
asset, awarded through litigation, investment, grant, membership fee etc.).it is
infrequent & non occurring.
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Which is more important, Profit or Revenue?
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 Both indicators are essential for a proper evaluation of business.

 Profit is the one that the stakeholders will pay more attention to.
“Revenue define how good you
are & profit define how
 Profit is the lifeblood of any business. Without profit, a business can quickly spiral excellent you are along with
out of financial control. safety, security & process”

 A good handle on profit and finding ways to increase, it should be one of the …MD - RFL
primary focuses for all business owners.

 The balance between the revenue and the profit margin will increase the
company's growth.
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Variable Cost
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 Variable costs are any expenses that change based on how much a
company produces and sells. This means that variable costs increase
as production rises and decrease as production falls.

 Some of the most common types of variable costs include labor,

utility expenses, commissions, and raw materials etc.
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Contribution Margin
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 The contribution margin is computed as the selling price per unit, minus the variable cost per
unit. Also known as dollar contribution per unit,

 It indicates how a particular product contributes to the overall profit of the company.

 It is usually used to calculate and track profitability on a unit basis.

 It helps pay for fixed costs. If contribution margin is negative, however, the company loses
money with each unit produces.

 The best contribution margin is 100%, so the closer the contribution margin is to 100%, the
better. The higher the number, the better a company is at covering its overhead costs with
money on hand.
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Fixed Cost
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 Fixed cost refers to the cost of a business expense that doesn’t change even with an
increase or decrease in the number of goods and services produced or sold.

 Fixed costs are commonly related to recurring expenses not directly related to production,
such as rent, interest payments, insurance, depreciation, and property tax etc.

 Fixed costs can be used to calculate key metrics, including the breakeven analysis or a
company's operating leverage.
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Shut down point
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 A shutdown point is a level of operations at which a company experiences

no benefit for continuing operations and therefore decides to shut down
temporarily or in some cases permanently

 The shutdown point denotes the exact moment when a company’s

(marginal) revenue is equal to its variable (marginal) costs.

 When a company can earn a positive contribution margin (Price>AVC), it

should remain in operation despite an overall marginal loss.

 At shut down point, fixed costs are considered as sunk costs.

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Shut down price calculation
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Break Even Point (BEP)
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 The break-even point is a point where revenue generated from sales of a

product is equal to the total cost (fixed cost plus variable cost).

 Zero profit is generated at the break - even point.

 On the graph, it is the point where the average total cost (ATC) is equal to
marginal cost (MC) (i.e., MC = ATC).
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Break Even Point (BEP) calculation
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Depreciation
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 The monetary value of an asset decreases over time due to use, wear and tear
or obsolescence. This decrease is measured as depreciation.

 The asset is depreciated until the book value equals salvage value.

 Depreciation formulas calculate the portion of an asset's cost that can be

deducted in a given year.

 Depending on the depreciation method, the depreciation amount may be the

same every year, or it could be larger in earlier years and decline annually
over the life of the asset.
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What are the factors for estimating depreciation?
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 Below factors that need to be considered in order to calculate the amount of depreciation to be
charged in each accounting period.

 Cost of the asset.

 Salvage value.
 Estimated useful life.
 Method of depreciation.

 The difference between the original cost of a property, and all the depreciation charges made to date
is defined as the book value.

 Book value represents the worth of the property as shown on the owner’s accounting records.

 Salvage value is the estimated value of an asset at the end of its useful life.
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Methods for determining depreciation.
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There are below commons method used to calculate annual depreciation expense
depending on the asset.

 Straight line (SLN) method:

Straight-line depreciation = (Cost − Salvage value of the asset) / Useful life

 Declining – Balance (DB) method:

Declining - Balance depreciation = Beginning book value x Rate depreciation

*Rate of depreciation = (100 %/ useful life of asset)

 Sum of Year Digit (SYD) method:

SYD depreciation = (Remaining life span/SYD) x (Cost – Salvage value)

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Top & Bottom line
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 Top Line: The top line refers to a company's revenues or gross sales.

 Bottom line: The bottom line is a company's net income, or the "bottom" figure on a company's
income statement. More specifically, the bottom line is a company's income after all expenses
have been deducted from revenues.

Bottom line (Net income) = (Top lines - All expenses) + Others Revenue

Bottom line can be increased by following steps….
A. Reduction of expenses by..
• Decreasing wages & benefits.
• Operating out of less expensive facilities.
• Utilizing tax benefits.
• Limiting the cost of capital.
• Produced using different input goods or
with more efficient methods.
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B. Increase topline by.. C. Adding others revenue by..
• Increasing production & prices. • Invest income.
• Lowering sales return through product • Interest income.
development.
• Sale of property or equipment.
• Expanding product types & smooth
distribution. • Rental or co-location fee collected.
• Targeting particular consumer through sales
initiatives.
• Acquires another business, which can give
rise to a higher market share.

Form of market
Monopoly Market
 One firm selling a unique product.
 Firm is price maker & highly inefficient.
 High barrier to entry (economics of scale).
 No difference between firm & market.
 High profit in long run.
 Firm is often regulated.
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Competitive Market
 Large number of firm selling a homogenous product.
 Firm is price taker & efficient.
 Free to entry & exit.
 Buyer & seller are fully informed.
 No patents, lenience, & high capital cost.
 Price is determined by market demand & supply.
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Short run equilibrium under monopoly
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Long run equilibrium under monopoly
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Short run equilibrium under perfect competition
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Long run equilibrium under perfect competition
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Cash flow statement?
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 A cash flow statement summarizes the amount of cash and cash equivalents entering and
leaving a company from operating, investing & financing activities.

 The cash flow statement complements the balance sheet and income statement.

 It can help determine whether a company has enough liquidity or cash to pay its expenses.

 The cash flow statement starts where the income statement ends with the net income. It
excludes non-cash transactions.

 The cash flow statement bridges the gap between the income statement and the balance
sheet by showing how much cash is generated or spent on operating, investing, and
financing activities for a specific period.
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Structure of cash flow statement.
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Cash flow from operating activities.
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 Cash flow operating activities (CFO) indicates the amount of money a

company brings in from its ongoing, regular business activities, such as
manufacturing and selling goods or providing a service to customers.
Cash from customer Salary paid out to employee

 It does not include long-term capital expenditures or investment

revenue and expense, focuses only on the core business.
Net cash of
Interest income Cash paid to vendor/ Supplier
 It affects the company's liquidity & helps to take steps to generate and CFO
maintain sufficient cash necessary for operational efficiency and other
necessary needs.
Tax & interest paid
Dividend received
 The cash flow from operating activities can be displayed on the cash
flow statement in one of two ways direct & indirect methods.
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Cash flow from investing activities.
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 Cash flow from investing activities (CFI) indicates how much

cash has been generated or spent from various investment-related
Sale of fixed assets Purchase of fixed asset
activities in a specific period.

 Investing activities include purchases of physical assets,

investments in securities, or the sale of securities or assets. Sale of investment Net cash of
Purchase of stock & securities
securities CFI
 Negative cash flow from investing activities might not be a bad
sign if management is investing in the long-term health of the
company such as research and development. Loan & insurances Lending money
proceeds
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Cash flow from financing activities.
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 Cash flow from financing activities (CFF) is the net amount of

funding a company generates in a given time period.
Issuing equity or stock Stock purchase
 It measures the movement of cash between a firm and its owners,
investors, and creditors.
Borrowing debt from Net cash of
 Finance activities include the issuance and repayment of equity, creditor or bank CFF
Dividend payment

payment of dividends, issuance and repayment of debt, and capital

lease obligations.
Issuing bond that Paying down debt
 This report shows the net flow of funds used to run the company investors purchase
including debt, equity, and dividends.
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Balance sheet?
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 A balance sheet is a financial statement that reports a company's assets,

liabilities, and shareholder equity at a specific point of time.

 It provides a snapshot of a company's finances (what it owns and owes)

as of the date of publication.

 It helps to understand the current financial health of a business.

 The formula is: Total assets = Total liabilities + Total equity.

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Structure of balance sheet Dream
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Assets? Dream

 An asset is any resource that a business owns or controls. It's anything that could be sold for money.

 Assets can be classified as current, fixed, financial, or intangible.

 Current assets are assets that are expected to be turned into cash within a year. Current assets include cash
and other things that can be used as cash, accounts receivable, inventories, and prepaid expenses.

 Fixed assets are things like plants, equipment, and buildings that will last long.

 Financial assets consist of investments in the assets and securities of other institutions. It consist of stocks,
bonds issued by the government and corporations, preferred stock, and other hybrid securities.

 Intangible assets are valuable things that can't see or touch. Patents, trademarks, copyrights, and goodwill
are all part of this.
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Liabilities? Dream

 A liability is something that is owed by a person or company. A liability could be a loan, taxes payable, or
accounts payable.

 Liabilities are settled over time through the transfer of economic benefits including money, goods, or
services.

 Companies divide their obligations into two groups: current and long-term (non-current).

 Current liabilities are due within a year which include Wages Payable, Interest Payable, Dividends Payable,
Unearned Revenues & Liabilities of discontinued operations.

 Long-term liabilities are due over a longer period of time which include debentures, long-term loans, bonds
payable, deferred tax liabilities, long-term lease obligations, and pension benefit obligations.
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Equity? Dream

 Equity is the amount of money that a company's owner has put into it or owns.

 It represents the value that would be returned to a company’s shareholders if all of

the assets were liquidated and all of the company's debts were paid off.

 Equity includes such as Common stock, Preferred stock, Retained earnings,

Contributed surplus, Additional paid-in capital, Treasury stock, Dividends, Other
comprehensive income (OCI)
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Summary comparison of IS, BS & Cash flow
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What is cost behavior analysis?
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Concept of utility Dream
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Cost of Capital
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 Cost of capital represents the return a company needs to achieve in order to justify the cost of
a capital project, such as purchasing new equipment or constructing a new building.

 The cost of capital becomes a factor in deciding which financing track to follow: debt, equity,
or a combination of the two.

 A firm's cost of capital is typically calculated using the weighted average cost of capital
(WACC)formula that considers the cost of both debt and equity capital.

 A company's investment decisions for new projects should always generate a return that
exceeds the firm's cost of the capital used to finance the project. Otherwise, the project will
not generate a return for investors.
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Hurdle rate?
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 The hurdle rate is the minimum rate of return on an investment that will offset its
costs.

 Hurdle rates give companies insight into whether they should pursue a specific
project.

 Riskier projects generally have a higher hurdle rate, while those with lower rates
come with lower risk.

 The internal rate of return is the amount above the break-even point that an
investment may earn.

 A favorable decision on a project can be expected only if the internal rate of

return is equal to or above the hurdle rate.
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Triple Bottom Line?
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 The triple bottom line (TBL) is an accounting framework that includes social, environmental and
financial results as bottom lines.

 Businesses, nonprofits and government entities use TBL to evaluate their financial gains, as well as
their social and environmental impact rather than only focusing on the standard bottom line.

 The idea behind the TBL is to gauge an organization's commitment to corporate, environmental
and social responsibilities.

 Large organizations tend to have a bigger effect on the surrounding people and environment, so
expanding their typical bottom line by considering both people and the planet can help improve
people's lives and the planet's well-being.
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Triple Bottom Line?
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Three P’s…
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Triple bottom line is typically measured using the three P's:

 Profit,
 People and
 Planet.

Although there is no single established way to measure each bottom line, common
methods do appear in each.
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Three P’s…(Profit)
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Profits tend to focus on aspects of a business that generate revenue, such as business
decisions made, strategic planning, or performance and cost reduction methods.

Profit = Revenue - Expenses

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Three P’s…(People)
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 This bottom line includes all stakeholders, employees, individuals throughout

the supply chain customers, the organization's surrounding community and future
generations.

 Methods to help measure this bottom line include…

 Advancing human rights.

 Volunteering.
 Donating to the global poor or hungry.
 Promoting diversity, race and gender equity.
 Improving life expectancies.
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Three P’s…(Planet)
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 This bottom line should help measure and improve an organization's

commitment to reducing its environmental footprint.

 Methods to help measure this bottom line include…

 Reducing carbon footprints.

 Cutting down on energy consumption.
 Reducing consumption and reliance on fossil fuels.
 Improving waste management.
 Streamlining shipment practices.
 Using ethically sourced materials.
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Why is triple bottom line is important?
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Triple bottom line is important because it affects everyone. It does not just focus on business and
corporate leaders, but also social communities and the business's impact on the planet. This
accounting framework provides:

 A more sustainable future that considers both social and environmental sustainability.

 Methods to set goals and measure and improve sustainable systems.

 New ways to generate profit, such as attracting new customers who want to lessen their
impact on the environment.

 A healthier work environment that focuses not only on employees, but the organization's
standing in its surrounding social environment.
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Business benefit of triple bottom line?
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Organizations that practice the triple bottom line may gain benefits such as…

 Reduced energy consumption and carbon footprint by focusing on the environment.

 Higher employee retention rates by making the work environment more pleasant for
workers.

 Enhanced brand perception and reputation by showing others the organization stands
for more than just making profits.

 Improved productivity and reduced costs through sustainability efforts.

 Increased transparency and accountability of operations, potentially attracting new

investors.
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Challenge & criticism of triple bottom line.
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Triple bottom line also comes with its share of criticism. This includes:

 There are no specific guidelines to accurately measure TBL.

 There are no ways to measure an organization's commitment to people and the

planet, the same way as profits.

 Reaching a global standard and having enough companies abide by that standard
would be difficult and would require consumers to pay more for ethically grown or
sourced materials and products.

 Because of a lacking standard in measuring TBL, business leadership can put in

minimal effort to follow the framework, while reaping the social benefits of
claiming they follow the framework.
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Sales
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Marketing
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Six Sigma & Lean Management
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Dream

Learning Continue……