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What Is FP&A?
FP&A is a set of activities that support a company in
accomplishing strategic objectives and managing an
organization's financial health:
Forecasting
Financial modeling
Scenario modeling
Analytical activities
Business partnering
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Common FP&A Roles
Architect - Bridge between IT and finance. Have a
helicopter view of how everything fits together.
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Budgeting & Forecasting Methods
Common methods for budgeting & forecasting:
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Compensation Costs
Base Salary - This is the base rate paid to an employee. Usually, either an hourly
rate or an annual salary.
Hiring Costs - The cost to hire an employee, including recruiting costs, relocation,
and hiring bonuses.
Benefits - These are benefits above and beyond base salary, such as insurance
premiums, travel, education reimbursements, etc.
Overtime - Estimate for the amount of overtime that hourly employees will work
during the year.
Attrition - Estimate a rate of attrition and build it into the compensation costs.
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Managing Expenses
Ways to Reduce Expenses:
Eliminate unused Software licenses.
Get rid of duplicate software.
Outsource non-core functions.
Offshore established processes.
Leverage buying power to reduce third-party spending.
Limit Overtime.
Stop servicing unprofitable customers.
Require capacity modeling support prior to approving backfills.
Shut down unprofitable products.
Stop all non-essential T&E.
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Financial Ratio Analysis
Ratio Analysis – Financial ratios are a way to analyze a business
and to easily compare and benchmark them against other
businesses in an industry.
Profitability Ratios
Liquidity Ratios
Efficiency Ratios
Coverage Ratios
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Efficiency Ratios
Common Operational Measures/(Efficiency Ratios):
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Efficiency Ratio Analysis
Pros
Easy to implement.
Less time intensive.
Cons
Not as detailed.
Many small items, when added together, can
be material and get missed as the focus is on
material items.
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Revenue R&O Example
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Reduced T&E due to COVID-19.
Assessing Your FP&A Function
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Benefits of an FP&A Org. Assessment
Provides an understanding of the current state.
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What to Review During an Assessment
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FP&A Assessment Resources
FP&A Maturity Assessment Model — FPANDA CLUB –
Developed by Anna Oblakova
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Assessment Example
Conduct FP&A Skills Inventory Analysis:
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Sample Stakeholder Survey
Open Ended Questions:
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FP&A Assessment Model
Developed by Anna Oblakova, Based on a set of questions,
you rate your current and desired state on 18 areas such as
(Tools, Reporting, Team Development, etc.):
Lagging
Emerging
Defined
Progressive
Visionary
Budgeting/Financial Modeling
Dashboards/Reporting
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Budgeting/Financial Modeling
Data Model - What dimensions are included for modeling?
Calculation Engine - What does it use for the calculation engine
(Excel, Google Sheets, multi-dimensional modeling, other)?
Modeling Syntax - Is the syntax easy to learn?
Structure vs. Flexibility - Is the tool flexible enough to handle
your modeling needs? Does it have pre-built templates, can you
build your own templates?
Planning Model - What levels and modules does the tool have for
modeling. Revenue, headcount, expense, operational, etc?
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Dashboarding/Reporting
How well does the tool integrate with PPT, Google Slides, Excel,
etc.?
Can the data be easily connected with BI tools?
Can one bring in and display outside data in dashboards?
Can one create custom metrics and reports, or are you limited in
what reports are available?
How does the licensing work for sharing reports?
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Workflow/Collaboration
Can you create custom workflows?
Can you have multiple levels of approvals?
Can you assign a person and a date to each item in the workflow?
Do your notifications integrate with Teams, Outlook, Slack?
At what level can you leave comments, can you comment on
specific data elements?
Can you create threaded comments?
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The Art of Storytelling
1. Vulnerable Origin
2. Intention
3. Struggles & Obstacles
4. Transformation
5. A Message that Matters
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Presenting Resources
www.ted.com/watch/tedx-talks
Watch presentations & take notes on what works!
Online Courses
(Linkedin/Udemy/Coursea)
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Strategic Frameworks
SWOT Matrix
Porter's 5 Forces
PEST Framework
VRIO Famework
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SWOT Matrix
SWOT - SWOT stands for strengths, weaknesses, opportunities, and
threats. Consists of listing your strengths and weaknesses (internal)
and opportunities and threats in the marketplace (external).
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
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Porter's 5 Forces
Porter's Five Forces - Porter's Five Forces is a framework that is used
to assess the attractiveness of an industry based on five competitive
forces.
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Boston Consulting Group (BCG) Matrix
BCG Matrix - The BCG matrix uses 4 quadrants to rank the
attractiveness of your products based on market share size and market
growth rate. The four quadrants are Stars, Question Marks, Cash Cows,
and Dogs.
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PEST Analysis
PEST Framework - PEST framework is used to assess your business
based on four major factors that could impact your business: political,
economic, social, and technological factors.
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VRIO Framework
VRIO Framework - The framework reviews your company's resources
through four lenses. These lens are value, rarity, imitability, and
organization.
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Resources to Learn More
WEBISTES
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FP&A Websites
FP&A Professionals (fpnaprofessionals.com)
FPANDA CLUB
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FP&A Courses
1. Financial Planning & Analysis Certification - Association of
Finance Professionals
2. FP&A BootCamp - Christian Wattig
3. Financial Modeling& Valuation Analyst - Corporate Finance
Institute
4. FP&A Mastery Program - Wall Street Prep
5. Become a Corporate Financial Planning Analyst - LinkedIn
Learning
6. Udemy includes courses such as
World Class FP&A Org
FP&A Foundations
FP&A: Building a Company's Budget
7. IMA's FP&A Certificate Series
8. Ilumeo.com
Corporate, Planning, budgeting, & Forecasting
44 Budgeting Best Practices
FP&A Certificate (FPAC)
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FP&A Bootcamp
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FP&A Mastery
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Other FP&A Courses
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Other FP&A Courses
https://www.illumeo.com/course
s/corporate-budgeting-best-
practices-training-course
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Other Finance Courses
Become a high-performing
finance professional
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FP&A Follows
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FP&A Follows
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Retail Industry Metrics
Sales Per Square Foot - Helps determine how efficient you are at using
store space.
Net Sales/Store Square Footage
Sales Per Employee - Sales generated per employee, helps with staffing
stores.
Net Sales/# of Employees
Average Order Value - Average amount a customer spends per
order/transaction.
Conversion Rate - Helps you understand how many people who visited your
store/website became a customer
(# of Sales/# of vVsitors)*100
Inventory Turnover - Number of times you turned over your inventory
during a time period.
Cost of Goods Sold/Average Inventory Cost
Gross Margin Return on Investment - This tells you the profitability of
your inventory
Gross Profit Per Partner - Measures the amount of Gross Profit each
partner is bringing in across their portfolio of business
Quality*Availability*Performance
Throughput - Measures how much a machine, factory, person is producing
over time.
Units Produced/Time
Yield - This is a quality and performance KPI that measures how much of
your product is usable.
Average Cost Per Claim - The average amount paid out per claim filed by
customers.
All Claim Costs/# of Claims
Return on Surplus - Measures how much profit an insurance company can
bring in relative to the revenue it generates from its policies.
After-Tax Income & Capital Gains/Total Assets
Loss Ratio - Measures the amount paid out in policy claims vs the total
amount earned from all premiums.
Total Policy Payouts/Total Revenue from Premiums
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ARR vs. CARR
𝐀𝐑𝐑 - Annual Recurring Revenue is typically calculated as money
earned over the next year from live contracts. ARR excludes
revenue that is committed but has not started booking.
𝐂𝐀𝐑𝐑 - Includes revenue that has gone live and revenue that is
booked and committed to go live and become recurring revenue.
This allows companies to more accurately reflect all revenue,
both committed and already recurring.
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Common
SAAS
Metrics
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Common SaaS Metrics
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Common SaaS Metrics
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Common SaaS Metrics
https://www.subscript.com/the-dive/how-to-track-and-analyze-b2b-
saas-metrics
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Tips for Aligning & Standardizing
Align upon company-wide SaaS metrics to track
and report.
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Metrics Calculated Multiple Ways
Customer Acquisition Cost (CAC) Payback - Several
methods exist for calculating CAC. Requires aligning on Sales
and Marketing Costs to include in the numerator and what
MRR and margin in the denominator.
Churn Rate - Churn can be calculated based on total revenue,
total customers, and both net and gross churn. Many different
methods exist for determining churn.
Conversion Rate - How you calculate your conversion rate
will vary depending on how you define a conversion and what
you consider a lead. Is the rate only for qualified leads or all
leads, etc.?
Average Revenue Per Account - Requires alignment on
what revenue to contain and how to calculate # of accounts
during the period.
Rule of 40 - Uses growth rate + profitability margin. The
growth rate is typically based on GAAP accounting, but several
options exist for what profit margin to use.
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Section 2 - Microsoft Excel
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Excel Shortcut Keys
Shortcut Key Shortcut Description Shortcut Key Shortcut Description
Ctrl +D Fill cell from data in cell above Ctrl + 9 Hide a row
Ctrl + G Jump to an area within workbook Ctrl + ; Enter current date in cell
Ctrl + H To find and replace cell contents Ctrl + - Delete columns or rows
Ctrl + Shift + $ Apply currency formatting Alt + Page Up Move the screen toward the left
Ctrl + Shift + # Apply date formatting Ctrl + F2 Open print preview window
Ctrl + Spacebar Select an entire column Tab Move to the next cell
Syntax: =FILTER(array,include,[if_empty
Syntax: =HSTACK(array1,[array2]...)
Parameter - A value that you want to send to the functions could be a cell
reference, a string or a number. You can include up to 253 parameters in a
LAMBDA function and this argument is optional.
Calculation - The calculation arguments is where you enter the formula you want
to execute and return as the result of the custom function you have created. This
is the last argument in the formula and is required.
Functions include:
MAP
REDUCE
SCAN
MAKEARRAY
BYROW
BYCOL
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Microsoft Excel 365 Functions
SEQUENCE - Used to generate a list of sequential numbers in a
arnage/array.
Syntax: =SEQUENCE(rows,[columns],[start],[step]
Rows - Enter the number of rows you want to return, is a required field
[Columns] - Enter the number of columns you want to return, optional field
[Start] - Enter the number you want to start with if not entered, starts with 1
[Step] - Enter the amount to increment each number by if not entered assumes 1
Syntax: =Single(value)
Value - Enter the value you want to be evaluated using implicit intersection.
Syntax: =DROP(array,[sort_index],[sort_order],[by_col])
Syntax: =SORTBY(array,by_array1,[sort_order1],[by_array2],
[sort_order 2],...
Array/Range - The range/array that is being sorted
By_array1 - The first range/array to be sorted on
[Sort_order1] - Sort order for criteria 1, 1 for ascending, -1 for descending
[By_array2] -The second range/array to be sorted on
[Sort_order2] - Sort order for criteria 2, 1 for ascending, -1 for descending
... You can have multiple arrays and sort orders and such as 3,4,5,6, etc.
Syntax: =TAKE(array,rows,[columns)
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Microsoft Excel 365 Functions
TEXTBEFORE - Allows you to return text before a given character
or string.
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Microsoft Excel 365 Functions
TEXTSPLIT - Allows you to split text strings by using column and
row delimiters
Syntax: = TOCOL(array,[ignore],[scan_by_column])
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Microsoft Excel 365 Functions
TOROW - Returns an array/range in a single row
Syntax: =UNIQUE(array,[by_col],[exactly_once]
Array/Range - The array/range from which you want to return unique list
[by_col] - This argument is optional and is used to determine how to compare data
[Exactly_once] - Optional argument that return list of data that appears only once
Array1 - This is the fist array you want to append to the list
[Array2].. This is the additional arrays you want to append to the list
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Microsoft Excel 365 Functions
WRAPCOLS - Wraps the provided range/array by columns at a
specified point to create a new array
Syntax: =XMATCH(lookup_value,lookup_array,[Match_mode],
[Search_mode])
Lookup_value - The value you want to lookup in your array
Lookup_array - The range/array to search in for the lookup value
[Match_mode] - Match type, 0 - exact, -1 exact or next smallest, 1- exact or next
largest, 2 - wildcard match
[Search_mode] - 1 - search first to last, 2 - search last to first, 2 and -2 binary
Syntax: =XMATCH(lookup_value,lookup_array,return_array,
[if_not_found],[Match_mode],[Search_mode])
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Excel Tabular Data Structure
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Excel Table Benefits
Takes an array or range of data and turns it into a
“structured data set” .
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Excel Table Layout
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Excel Table Design Menu
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Table Nomenclature
Tables are similar to named ranges in that they can have no spaces in the name
but can have _ and . in the name. For example, the above table is named
Data.CP. Similar to named ranges you can reference table names in excel
formulas.
Table Headers – Table headers use the nomenclature of the table name so in this
case = Data.CPG[Headers] in a cell would reference all six header rows in the
above example. If I wanted to reference the first column header Sku name I
would write = Data.CPG[[#Headers],[sku name]].
If I needed to reference the data in a specific column, I would type the table name
= Data.CPG followed by the column name so if I wanted to reference the column
period, I will write Data.CPG[Period].
This type of structured referencing makes creating calculated columns easy. For
example, say I need to add a new column called ASP, and I need to multiply the
Quantity column x the Price column in a new column labeled ASP I would write =
[Quantity]*[Price] and it would automatically calculate the answer in every row
within that column.
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Power Query
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Power Query
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Power Query Interface
Power Query opens inside Excel as a separate window. When
Power Query is open, you cannot work on your Excel
worksheet.
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Power Query Menus
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Excel Websites
Exceljet | Work faster in Excel – This website does a
great job of providing guidance on every function
available in Excel today.
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Excel YouTube Channels
Mike Excel is fun Girvin (ExcelIsFun - YouTube) - the channel has
nearly 3,500 videos. He has 100’s of playlists, including full free
courses he teaches at his local college. His videos include
everything from beginner to highly advanced concepts.
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Financial Modeling Skills
Understanding of accounting
Attention to detail
Presentation skills
Analytical skills
Problem-solving
Forecasting
Budget/Forecasting Model
Consolidation Model
Project Model
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Profit & Loss Statement
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A Financial Model
Fed Reserve Definition (SR11-7) - A Quantitative method,
system or approach that applies statistical, economic, financial or
mathematical theories, techniques, and assumptions to process
input data into quantitative estimates."
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Profit Frog Series
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Financial Modeling Books
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Finacial Modeling Online Resources
Financial Modeling Knowledge Hub
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Financial Modeling Follows
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Section 4 - Other
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Podcasts
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The FP&A Guy Services Offered
Contact me at pbarnhurst@TheFPandAGuy.com if you are
interested in any of the below services:
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