Ep 47: Maximizing Financial Health: Key Strategies for Business Owners with Dale Shafer II, CFP

In Episode 47 of the Financial Purpose Podcast, host Dale Shafer II, CFP, shares invaluable insights on how business owners can effectively manage their business and personal finances using very similar KPIs. Dale covers five critical areas that bridge business and personal finance: Cash Flow Management vs. Profitability, The Impact of Interest Rates and Inflation, The Importance of Financial Forecasting, Understanding Financial Statements, and The Role of Working Capital. Tune in to learn how to optimize your financial health and achieve your business and personal financial goals.

Key Terms discussed:

• Current Assets: also known as a liquid asset, is any resource a company could use, turn into cash, or sell within a year.
• Current Liabilities: a company's short-term financial obligations that are due within one year or within a normal operating cycle.

Key Performance Indicators (KPIs) for Business financials:

• Net Profit Margin: Net Income ÷ Total Revenue
• EBITDA Margin: EBITDA ÷ Total Revenue
• Current Ratio: Current Assets ÷ Current Liabilities
• Quick Ratio (Working Capital): (Current Assets - Inventory) ÷ Current Liabilities
• Return on Assets: Net Income ÷ Net Assets
• Receivables Turnover: Total Revenue ÷ Accounts Receivable
• Debt-to-Assets: Total Debt ÷ Total Liabilities ÷ Net Assets

Key Performance Indicators (KPIs) for Personal financials:

• Free Cash Flow Margin (monthly): Net Income (after all expenses) ÷ Total Income
• Net Worth: Total Assets - Total Liabilities (Debt)
• Current Ratio: Current Assets ÷ Current Liabilities
• Burn Rate (annualized): Spending (less debt payments) ÷ Total Income
• Debt Rate (annualized): Total debt payments ÷ Total Income
• Liquidity Rate (annualized): Liquid Assets ÷ Total Spending
• Total Term Rate (annualized): Net Worth ÷ Total Spending

Learn more about our approach with these and other KPIs for business and personal financials: https://lifemoveswealth.com/ourapproach/