TIME Magazine listed Sugru alongside the iPad as one of the top 50 - - PowerPoint PPT Presentation

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TIME Magazine listed Sugru alongside the iPad as one of the top 50 - - PowerPoint PPT Presentation

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NOVEMBER 2010 TIME Magazine listed Sugru alongside the iPad as one of the top 50 inventions of 2010. The iPad was number 34, Sugru was number 22. Boom! Sugru https://sugru.com/ Introduction to business financials: financial termnology Richard

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NOVEMBER 2010

TIME Magazine listed Sugru alongside the iPad as one of the top 50 inventions of 2010. The iPad was number 34, Sugru was number 22. Boom!

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Sugru https://sugru.com/

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Introduction to business financials: financial termnology

Richard Brooks

Richard Brooks

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

Terminology

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

What I intend to cover

  • 1. Sales Price and Costs of Sales
  • 2. Gross Profit (Gross Margin)
  • 3. Difference between cash and profit
  • 4. Fixed costs, overheads
  • 5. Group Exercise

Agenda

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

Sales Price for a product or a service Sales price = What the market will accept

  • 1. Sales Price & Cost of Sales

Entrepreneurship for Scientists and Engineers in Tanzania July 25 -29, 2016

Product or Service

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Richard Brooks

What you really need to know

Gross margin = Gross Profit Sales less Costs of goods sold

= Gross margin

  • 1. Sales Price & Cost of Sales

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

Gross Margin

PROFIT & LOSS EXTRACT

A Sales

1,000

B Costs of goods sold

500

C Gross Margin A-B

500

D Gross margin % (A-B)/A

50%

  • 2. Gross Margin

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

  • 2. Gross Margin

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

Description Unit Sales Price (net of sales tax, VAT) 150.00 COST OF SALES WORKINGS: Materials 30.00 Import Duty on materials

  • Labour (direct wages)

40.00 Other Direct Costs 20.00 Delivery costs 5.00 Transport Insurance 1.00 Duty e.g. export

  • Bank Charges on sales receipts

1.00 Commission to sales agents 3.00 Total Cost of sales 100.00 Gross Profit (margin %) 50 (33%)

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Richard Brooks

Examples of gross margins in different sectors Software >90% Technology 30-90% Food manufacturing 15-25% Manufacturing (low tech) 15-50% Professional services, education 30-50%

  • 2. Gross Margin

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

PROFIT & LOSS EXTRACT

A

Sales 1,000

B

Costs of goods sold 500

C

Gross Margin 500

A-B D

Gross margin % 50%

(A-B)/A

CASHFLOW

Month1 Month2 Month3 Month4

Cash inflows: Customer receipt 1,000 Cash outflows: Payment to supplier

  • 500

Net inflow/(outflow)

  • 500

1,000 balance b/fwd

  • 500
  • 500
  • 500

balance c/fwd

  • 500
  • 500
  • 500

500

  • 3. Cashflow V Profit

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

Overheads

Example categories (used in App) Development Staff Director’s pay General expenses

  • 4. Fixed Costs, overheads

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Your turn…

I have handed

  • ut a sheet of

definitions I am displaying a sheet of financial terms which I will leave displayed here

Your task is to match the correct term with its definition. Write the term in the box to the right of the definition

When you are finished, let us know by putting your hand in the air.

There will be a prize for the first team with a correct answer

Exercise

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

1

Financial terms Financial terms

Balance sheet Cash breakeven Cash flow statement EBITDA Depreciation Profit and loss account Gross margin Variable costs Working capital Return on investment

Exercise

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018

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Richard Brooks

richard.brooks@fdsolutions.uk.com  www.fdsolutions.uk.com

Entrepreneurship workshop for Scientists and Engineers International Centre for Theoretical Physics 19 – 23 March 2018