See Also:
How to Prepare a Breakeven Analysis
Contribution Margin
Cost Volume Profit Model
ProForma Financial Statements
Net Profit Margin AnalysisInvestor Package
The Investor Package serves as a medium to visually communicate to the Owner/Management financial information which they might otherwise have difficulty digesting in financial statements. This is not unusual since many entrepreneurs have a better intuitive grasp of the financials rather than an analytical understanding. A secondary benefit of creating the Investor Package is that the preparer is able to share this information with banks, suppliers or any other concerned parties.
The impact of the Investor Package contrasts with the effort to create it. Based on historical experience, the Owner/Management appreciated the value of the Investor Package more so than the many analyses and hard efforts put forth for other projects. Much of this has to do with how the graphical nature of the Investor Package allows the entrepreneur to intuit the financial statement.
At it's core, the Investor Package is collection of graphs that tells a story about the company's financial health.
• Current Year Monthly Projected Revenue and Monthly Net Income
• Annual Projected Revenue and Net Income YTD
• Monthly
Working Capital• Monthly
Debt to Equity• Budget versus Actual Net Income
• Budget versus Actual Revenue
• Total
Accounts Receivable (YTD)
• Days A/R Outstanding
• Projected Inventory
• Average Days of Inventory
However, as always the needs of the individual company may vary from situation to situation.
The biggest challenge to setting up the Investor Package is access to good information. The most important inputs are current and projected monthly financial statements. This means that you may need to finish certain projects before you can start on the Investor Package. Once complete, it will be necessary to maintain the graphs by inputting the information in on a monthly or quarterly basis.
Accumulate InfoIn order to successfully create the Investor Package the company's financial information will need to be gathered and/or created: Current Monthly Financial Statements (
Balance Sheet and
Income Statement), Updated
Cash Flow Projections (Balance Sheet, Income Statement and
Cash Flow Statement) and Financial Statements from last 4 years (Balance Sheet, Income Statement and Cash Flow Statement). Note: This is optional depending on whether or not you would like to bring in historical financials as a comparison to current fiscal year performance.
Depending on the robustness of the company’s financial control system, you may or may not have some of the above inputs. As such, it will be necessary to first create them prior to working on the Investor Package.
The investor package will need to be updated on a monthly basis. This target may change depending on how much other work and/or projects that will need to be accomplished before then.
The CFO/Controller should set up the template. Another consideration would be to "outsource" the task to a consultant.
Historical and Year To Date financial statements can be easily obtained if you use an accounting system such as PeachTree, QuickBooks or Great Plains. The company may or may not have updated financial projections. If not, it will be up to you to put that on the Action Plan as one of the projects to accomplish.
Input Financial InfoOnce you have gathered and/or created all the necessary financial statements, it will now be time to enter the appropriate data into the template. The 10 core graphs in the Investor Package all draw from the following information: Revenue,
Net Income,
Working Capital,
Debt to Equity, Accounts Receivable, Days Accounts Receivable Outstanding, Inventory, Cost of Sales, Averge Days in Inventory, Current Month Balance Sheet and Current Month Income Statement.
The current month and year to date information for the Balance Sheet and Income Statement in an Excel format will also be needed as they will be part of the Investor Package.
Historical and year to date financial statements can be easily obtained if you use an accounting system such as PeachTree, QuickBooks or Great Plains. However, you may need to work with the Owner(s)/Management to create the financial projections.
Customize GraphsDetermine what graph(s) you want to include in the Investor Package. Determine what additional information you will need: Do you need to create a new table for inputting the data? Will it be possible to use existing information already there? What 4-year historical information will you need (if any)? Create a new input table as necessary in the Input Section. Key in the appropriate information into their respective tables in the Input Section. Create a new graph in Excel and link to the appropriate cells in the Input Section.
Maintain Monthly/QuarterlyOnce the Investor Package has been tailored to meet the company's needs, the basic infrastructure has been set up. The task will now shift to maintain the package by continuously updating it with current financial information. Maintenance should be done on either a monthly or quarterly basis.
The CFO/Controller should set up the template. Another consideration would be to "outsource" the task to a consultant.