AI for Finance • Data Studios

|| EXPENSE vs EXPENDITURE || Full articles at www.datastudios.org follow AI for Finance • Data Studios 📖 DEFINITIONS ✦ EXPENSE ··· Costs incurred during a company's operations to generate revenue, such as rent, utilities, and salaries ··· Scope ⟶ Typically short-term, recurring costs related to day-to-day operations ✦ EXPENDITURE ··· Broader term that includes any spending of funds, including large investments and capital purchases ··· Scope ⟶ Includes both operational costs (expenses) and long-term investments like property or equipment ____________ 🧾 PRESENTATION IN FINANCIAL STATEMENTS ✦ EXPENSE ··· Placement ⟶ Listed on the income statement as operational costs deducted from revenue ··· Day-to-Day Costs ⟶ Represents the short-term costs associated with running the business ✦ EXPENDITURE ··· Placement ⟶ Appears on both the income statement (for operating expenses) and the balance sheet (for capital expenditures) ··· Long-Term View ⟶ Covers both daily expenses and large purchases like fixed assets ____________ ⚙️ 3. COMPONENTS ✦ EXPENSE ··· Operating Expenses ⟶ Costs like rent, utilities, and salaries ··· Selling and Administrative Expenses ⟶ Includes marketing, office supplies, and management wages ✦ EXPENDITURE ··· Capital Expenditure ⟶ Large investments like property, equipment, or machinery ··· Operating Expenditure ⟶ Regular operating costs, which are also classified as expenses ____________ 🔢 FORMULAS Expense = Operational Costs (e.g., Rent, Utilities, Salaries) Expenditure = Expense Capital Purchases (e.g., Property, Equipment) •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance 👉Check the availability in your country here: geni.us/gptfinance DATA STUDIOS • EXAFIN #finance #corporatefinance #accounting #financialanalysis

🧐Our FULL GUIDE to ChatGPT for Finance •updated version• 👉NOW AT A SPECIAL LIMITED-TIME PRICE!⏰ 🔎Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. Find much more on www.datastudios.org DATA STUDIOS | EXAFIN •••••••• 🌐Follow AI for Finance • Data Studios finance #corporatefinance #accounting #ai #chagpt #copilot

|| REVENUE vs SALES || Full articles at www.datastudios.org AI for Finance • Data Studios 📖 DEFINITIONS ✦ REVENUE ··· This refers to the total income a company generates from its business activities: It includes sales of goods or services, as well as other income sources like interest, royalties, or licensing fees; ··· Scope ⟶ Revenue encompasses all the income streams of a company, not just from sales but also from any other business operations, including non-core activities. ✦ SALES ··· It refers to the income generated from selling a company’s primary goods or services. It’s a subset of revenue and represents the money earned from the core operations of the business; ··· Scope ⟶ Sales is focused only on the income directly tied to the sale of products or services, excluding any additional income sources. ________ 🧾 PRESENTATION ✦ REVENUE ··· Placement ⟶ Revenue is typically presented at the top of the income statement as the total income from all activities, before expenses are deducted; ··· Comprehensive View ⟶ Revenue gives a complete picture of the company’s total income, including non-sales income like investment returns, royalties, or fees. ✦ SALES ··· Placement ⟶ Sales, often labeled as "Net Sales," is also presented near the top of the income statement but focuses solely on the income from selling goods or services; ··· Core Focus ⟶ Sales provides a more focused view of the company’s core business activities, without including other income sources. _____________ ⚙️ COMPONENTS ✦ REVENUE ··· Sales Income ⟶ A significant portion of revenue comes from the company’s sales of products or services. ··· Other Income ⟶ Revenue also includes earnings from non-sales activities, such as interest, investment returns, or royalties. ✦ SALES ··· Goods or Services Income ⟶ Sales consist of the total money earned from selling products or providing services directly related to the company's core operations; ··· Discounts and Returns ⟶ Sales are typically shown after subtracting any discounts given and returns made by customers. ______________ 🔢 FORMULAS Sales = Units Sold × Price per Unit - Discounts - Returns Revenue = Sales Other Income (e.g., interest, royalties, fees) •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance 👉Check the availability in your country here: geni.us/gptfinance DATA STUDIOS • EXAFIN #finance #corporatefinance #accounting #financialanalysis

|| INVOICE PROCESSING & EXPENSE RECOGNITION || Full article on our site: www.datastudios.org Follow AI for Finance • Data Studios 🧾 1. PURCHASE INVOICE PROCESSING AND EXPENSE RECOGNITION: Efficient purchase invoice processing ensures timely and accurate expense recognition, an important reporting event that reflects a company's financial performance in the income statement! ✦ What is Expense Recognition? ‧‧‧ This refers to the accounting principle of recording expenses when they are incurred, not necessarily when they are paid: This aligns expenses with the revenue they generate, in accordance with the accrual accounting method ✦ Role of Purchase Invoices in Expense Recognition ‧‧‧ Purchase invoices act as the source document for recording expenses. When a company receives a purchase invoice for goods or services, it triggers the recognition of an expense, assuming those goods or services have been delivered and the obligation to pay has been established 📈 2. PURCHASE INVOICE PROCESSING WORKFLOW AND EXPENSE RECORDING The purchase invoice processing workflow integrates with the accounting process to ensure that expenses are recorded in the correct accounting period EXAMPLE: ‧‧‧ Purchase invoice for $10,000 is received in January for December supplies; ‧‧‧ Expense is recognized in December, aligning with the accrual accounting principle; ‧‧‧ Payment is processed in January, but the expense is recorded in December’s financials. [...] 📊 3. INCOME STATEMENT IMPACT OF EXPENSE RECOGNITION The expenses recognized through purchase invoice processing impact the income statement, specifically affecting profitability EXAMPLE: ‧‧‧ Revenue: $50,000 ‧‧‧ COGS: $30,000 (recognized from processed purchase invoices) ‧‧‧ Operating expenses: $10,000 (recognized from purchase invoices) ‧‧‧ Operating profit: $10,000 •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September/October 2024 version• 👉Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. •••••••• DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #ai #chagpt #copilot

|| EBIT vs OPERATING PROFIT: DIFFERENCES & COMPARISON || Find much more at www.datastudios.org Follow AI for Finance • Data Studios 🔄 1. Inclusion of Non-Operating Income and Expenses ✦ Operating Profit ··· Focuses exclusively on profits generated from core business operations; ··· Excludes non-operating income or expenses, such as: Gains or losses from investments Rental Income Restructuring Costs Litigation Expenses And of course also Interest and tax expense ✦ EBIT (Earnings Before Interest and Taxes): ··· Includes operating profit plus non-operating income and expenses (so it excludes also interest and taxes); ··· Accounts for earnings from both operational and non-operational activities before deducting interest and taxes. 📊 2. Presentation in Financial Statements ✦ Operating Profit: ··· Often explicitly reported on the income statement as "Operating Income" or "Operating Profit"; ··· Standardized under accounting principles like GAAP or IFRS; ··· Provides a clear view of operational performance directly from financial statements. ✦ EBIT: ··· Not always directly presented; may need to be calculated by analysts or investors; ··· Calculated by: Adding back interest and taxes to net income. Adjusting operating profit to include non-operating items. ··· Calculation can vary between analysts due to lack of standardization. 💼 3. Usage in Financial Analysis and Valuation ✦ Operating Profit: ··· Used to assess a company's operational efficiency; ··· Crucial for internal management decisions; ··· Helps compare the core business performance against competitors; ··· Identifies profit generation from primary activities without financial and tax influences. ✦ EBIT: ··· Widely used in valuation metrics and financial ratios like the EV/EBIT multiple; ··· Valuable for comparing companies with different capital structures; ··· Provides a neutral ground to evaluate profitability regardless of financing or taxation; ··· Aids in external financial analysis and investment decisions. 🧮 Formulas Operating Profit=Revenue−Cost of Sales−Operating Expenses EBIT=Operating Profit Non-Operating Income−Non-Operating Expenses Alternatively, calculated from Net Income: EBIT=Net Income Interest Expense Tax Expense •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September/October 2024 version• 👉Check the availability in your country here: geni.us/gptfinance •••••••• DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #ai #chagpt #copilot

|| Cost of Goods Sold VS Cost of Sales || Full articles at www.datastudios.org AI for Finance • Data Studios 📖 DEFINITIONS ✦ COGS ··· It refers to the direct costs attributable to the production of the goods sold by a company. This includes expenses such as raw materials, direct labor, and manufacturing overhead involved in creating the product ··· Scope ⟶ It is typically used by companies that manufacture physical goods: COGS is focused solely on the costs directly associated with producing or purchasing inventory that is later sold ✦ COST OF SALES ··· This is a broader term that refers to the costs directly linked to generating revenue. This can include COGS for goods, but also other expenses related to services in companies that don’t sell physical products ··· Scope ⟶ While Cost of Sales includes COGS for product-based businesses, for service-based businesses, it often includes direct costs such as wages for service delivery personnel or subcontractor fees. It applies to both goods and services companies. _______ 🧾 Presentation in Financial Statements ✦ COGS ··· Placement ⟶ Typically found directly on the income statement, COGS is subtracted from revenue to determine the gross profit; ··· Use in Product Businesses ⟶ Primarily used by companies that manufacture or sell physical products, making it a key line item for industries like retail, manufacturing, and wholesale. ✦ COST OF SALES ··· Placement ⟶ Similar to COGS, Cost of Sales appears on the income statement and is also subtracted from revenue to calculate gross profit; ··· Broader Presentation ⟶ Companies that provide services use the term "Cost of Sales" instead of COGS to reflect the total costs directly linked to revenue generation. It encompasses both goods and services costs, depending on the nature of the business. __________ ⚙️ Components ✦ COGS ··· Direct Materials ⟶ The raw materials used in producing the goods sold by the company; ··· Direct Labor ⟶ The wages paid to workers who are directly involved in manufacturing the product; ··· Manufacturing Overhead ⟶ Indirect costs related to the production process, such as utilities for the factory, equipment depreciation, and quality control. ✦ COST OF SALES ··· Goods Companies ⟶ For companies that sell goods, Cost of Sales can include all COGS components (materials, labor, overhead); ··· Service Companies ⟶ For service-based companies, it includes direct costs like employee wages for service delivery, subcontractor fees, or expenses related to providing the service; ··· Commissions ⟶ In some cases, commissions paid to sales staff or agents may also be part of the Cost of Sales in both goods and services businesses. •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance 👉Check the availability in your country here: geni.us/gptfinance DATA STUDIOS • EXAFIN #finance #corporatefinance #accounting #financialanalysis

|| FINANCIAL MODELING: STEPS & EXAMPLES || Full article on our site: www.datastudios.org Follow AI for Finance | Data Studios 📋 1. DEFINE THE MODEL'S PURPOSE This step clarifies the overall goal of the financial model and the scope of its analysis. It sets the foundation for what the model will achieve. ✦ OBJECTIVE IDENTIFICATION ••• Clearly understand what you're trying to achieve, whether it's valuing a business or assessing a project's feasibility; ✦ SCOPE DEFINITION ••• Determine the breadth of your model, including which financial aspects to include. EXAMPLE ‧‧‧ $5M production facility ‧‧‧ Expected to generate $2M/year starting in year 2 ‧‧‧ Goal to recoup investment within 10 years based on $500K annual profit after costs. 📊 2. GATHER HISTORICAL DATA AND ASSUMPTIONS In this step, collect the past financial performance and key assumptions to guide future projections. Accurate data and realistic assumptions are crucial. ✦ DATA COLLECTION ••• Compile relevant financial statements, such as income statements and balance sheets; ✦ ASSUMPTION DEVELOPMENT ••• Establish key assumptions for growth rates, costs, and other variables. EXAMPLE ‧‧‧ Last year’s revenue: $12M ‧‧‧ 40% gross margin ‧‧‧ New facility adds $2M in year 2 at 35% margin ‧‧‧ Projected $800K loss in year 2 due to high fixed costs 📐 3. BUILD THE MODEL This step involves structuring the financial model, entering the necessary formulas, and creating scenarios to test different outcomes. ✦ STRUCTURE DESIGN ••• Lay out the model logically, usually starting with revenue projections and then costs; ✦ FORMULA INPUT ••• Use formulas to automate calculations, ensuring accuracy and flexibility; ✦ SCENARIO ANALYSIS ••• Incorporate different scenarios to test how changes in assumptions affect outcomes. •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September/October 2024 version• 👉Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. •••••••• DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #ai #chagpt #copilot

|| AI CHATBOTS FOR FINANCE & ACCOUNTING: USE CASES || Full article on our site: www.datastudios.org Follow AI for Finance | Data Studios 📊 DATA ANALYSIS AND REPORTING ✦ AI chatbots automate report generation, summarizing large datasets into clear insights and highlighting trends, outliers, and key metrics... ✦ Tools like ChatGPT provide structured insights quickly especially when processes are pre-set ‧‧‧ Example Prompts ‧‧‧ "Summarize Q3 financial performance from the attached income statement." "Analyze the attached spreadsheet and highlight factors increasing overhead costs." 📈 FINANCIAL FORECASTING AND MODELING ✦ ChatGPT builds financial models, generates projections from historical data, and runs scenario analyses to test assumptions, improving efficiency and accuracy. ‧‧‧ Example Prompts ‧‧‧ "Generate a 5-year forecast based on revenue growth trends." "Run a scenario for a 10% sales drop and its impact on cash flow." "Predict operating expenses for the next 3 years based on inflation rates." ⚙️ TASK AUTOMATION ✦ ChatGPT automates repetitive tasks like invoice processing and account reconciliation, freeing up time for strategic activities. ‧‧‧ Example Prompts ‧‧‧ "Automate bank statement reconciliation for the past month." "Process and categorize attached invoices by department." 🤖 AND MUCH MORE... •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September/October 2024 version• 👉Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. •••••••• DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #ai #chagpt #copilot

🧐 In our new Free Guide from datastudios.org we explore...↓ 💰The importance of ACCOUNTS RECEIVABLE MANAGEMENT & how without some solid strategies, unpaid invoices/payment delays/other problems like those can drain your cash flow fast📉 The numbers involved? They can get big 🚨 And poor AR management could cost your business thousands. • Here are some common challenges: ⚠️ Challenge 1 ⟶ Trying to juggle a growing stack of invoices and clients can feel overwhelming; ⚠️ Challenge 2 ⟶ Setting clear credit policies that protect you from risky clients isn’t easy; ⚠️ Challenge 3 ⟶ Automating invoicing to eliminate delays and manual errors can save so much time! And it’s not just the finance team involved: 👩💼 Finance Clerks are on the front line, processing invoices day in and day out; 📈 Accounts Receivable Specialists keep an eye on every payment coming in (or not!); 💼 CFOs are busy making sure cash flow is strong while still keeping clients happy. Check out the full Guide attached 📥 •••••••• Find much more on www.datastudios.org 🌐Follow AI for Finance | Data Studios •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September 2024 version• 🔎Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #accountsreceivable #cfo #controller #accountant #ai #chagpt #copilot

|| PLANNING & BUDGETING: THE TWO PILLARS OF BUSINESS SUSTAINABILITY || ✦ PLANNING involves setting clear business objectives and developing strategies to achieve them; ✦ BUDGETING allocates the financial resources necessary to implement these strategies effectively. Full article here: https://lnkd.in/g4vzZN33 •••PLANNING••• 🧭 SETS DIRECTION AND PRIORITIES → Defines the company's vision and goals 🔍 MARKET AND COMPETITOR ANALYSIS → Researches industry and competitors to find opportunities 📊 RESOURCE EVALUATION → Assesses available resources to ensure plans are feasible 🎯 ALIGNS WITH GOALS → Focuses initiatives to support the overall mission 🌱 FOUNDATION FOR GROWTH → Provides structure for sustainable long-term growth _____ •••BUDGETING••• 💰 FINANCIAL REALISM → Turns strategic plans into actionable financial plans 🧮 COST CONTROL AND PERFORMANCE MONITORING → Manages expenses and tracks performance 📁 TYPES OF BUDGETS → Employs operating, capital, and cash flow budgets 📈 REVENUE FORECASTING AND COST ESTIMATION → Projects sales and estimates costs 🔎 VARIANCE ANALYSIS → Compares actual performance to budget and adjusts accordingly 🧩 SUPPORTS STRATEGIC ALIGNMENT → Allocates resources effectively to achieve objectives ___ Find much more at www.datastudios.org 🌐Follow AI for Finance | Data Studios •••••••• 🧐Check out our FULL GUIDE to ChatGPT for Finance •September/October 2024 version• 👉Check the availability in your country here: geni.us/gptfinance 📖Inside, we explore topics such as: ✦ Prompt Engineering for Finance & Accounting ✦ Data Processing & Analysis with both the ChatGPT "Free" and "Paid" versions ✦ Automation of tasks and operations, from Reporting to Analysis 🔓This is the only comprehensive guide on PDF currently available and easily accessible. 🤝We remain at your side if you need assistance. •••••••• DATA STUDIOS Org. | EXAFIN #finance #corporatefinance #accounting #ai #chagpt #copilot