CORPORATE ADVISORY DIVISION Financial Ration’s – Using ratios and benchmarking to improve club performance Tony Hood B.Ec C.A. M.B.A.

CORPORATE ADVISORYDIVISION

Financial Ration’s – Using ratios and benchmarking to improve club performance Tony Hood B.Ec C.A.

M.B.A

Ratio Analysis and BenchmarkingWhat are they?

- Relevant, meaningful ratios that provide insight into running the enterprise. Not usually absolute, rather the trend that matters

- Aged creditor ledger or Creditor days of 45? - Benchmark/ others or yourself. How relevant is Mt Pritchard to your

club?

Where do we start?

- Bank covenants. Times Interest Cover, Debt to Equity- Cash management ratios: Creditors Days, Stock Turn

Ratios that some clubs report on………but

Gearing Ratio : Measures the percentage of Capital employed that is financed by debt and long term finance

Current Ratio : An indication of a club’s ability to meet short term debt

Liquidity Ratio : as per current ratio but excluding stockEquity Ratio: Indicates the level of leverage used by a clubWorking Capital Ratios Stock Turn ( I prefer stock days/creditor days and debtor days)

Cash Flow Industries Pty Ltd

Cash Flow - Notes to the Accounts

Operating Profit -

Non-cash flows in operating surplus/(deficit)Depreciation XProfit on Sale of Plant & EquipmentLoss on Sale of Plant & EquipmentDoubtful Debts

Changes in assets and liabilities(Increase)/Decrease in Receivables - (Increase)/Decrease in Stock - (Increase)/Decrease in Prepayments - (Increase)/Decrease in Intangibles - Increase/(Decrease) in Payables - Increase/(Decrease) in Income in AdvanceIncrease/(Decrease) in Monies held in TrustIncrease/(Decrease) in Employee Entitlements

Cash flows from operations -

Cash Flow Statement

Cash flows from operating activitiesReceipts from customers - Payments to suppliers and employees -

- Interest expense - Net cash provided by (used in) operating activities -

Cash flows from investing activitiesProceeds from sale of property, plant and equipmentPurchase of property, plant and equipment - Net proceeds/(repayment) of loans to other entities - Net cash provided by (used in) investing activities -

Cash flows from financing activitiesNet proceeds/(repayment) of borrowing's - Net cash provided by (used in) financing activities -

Net increase / (decrease) in cash held - Cash at beginning of the financial year - Cash at end of financial year -

Reconciliation to Cash at bankPetty Cash - Overdraft -

-

Other ratios

Ibis World May 2010 Industry Report2009-10

Revenue : Liquor 21.6%, Gaming 56.1% Food 9.8%Revenue per employee $142,200Wages/ Revenue 25.72%Average Wage $36,569

Gaming Staff: 33% FT, 18% PT, 48.5% casual

Industry Costs ( as per Ibis World)

Key Issues in your club may include:•Stock Control•Minimisation of wastage•Control over labour inputs and costs (particularly FT v PT and casual).•Membership numbers, activity, duration, yield•F&B, Membership, Gaming, other if any

Month Total Income Fiscal Year 12mth RunningBalance

Jul-07 593,716 Aug-07 492,995 Sep-07 204,198 Oct-07 224,740 Nov-07 306,128 Dec-07 167,409 Jan-08 796 Feb-08 302,845 Mar-08 231,354 Apr-08 144,976

May-08 335,929 Jun-08 241,460 3,246,545 3,246,545 Jul-08 325,692 2,978,522

Aug-08 191,647 2,677,174 Sep-08 151,269 2,624,244 Oct-08 300,694 2,700,199 Nov-08 308,867 2,702,938 Dec-08 423,073 2,958,601 Jan-09 2,691 2,960,497 Feb-09 418,882 3,076,533 Mar-09 245,260 3,090,439 Apr-09 70,940 3,016,404

May-09 290,743 2,971,219 Jun-09 207,254 2,937,012 2,937,012 Jul-09 344,959 2,956,279

Aug-09 368,801 3,133,433 Sep-09 390,710 3,372,874 Oct-09 362,517 3,434,697 2,500,000

2,600,000 2,700,000 2,800,000 2,900,000 3,000,000 3,100,000 3,200,000 3,300,000 3,400,000 3,500,000

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100,000

200,000

300,000

400,000

500,000

600,000

700,000

2006

2007

2008

What others do….

•Customer counts at relevant venues•Assessment of competitors actions and strategies•Knowing thyself and knowing they enemy

•Use of sampling for knowledge

•Research monitoring (White/Blue)

•Analysis of Market 10- 3, 3- 9, Saturdays etc

•Wastage reports, rules for waste stock