Where The Money Hides

Turn Your Financial Statements Into Better Decisions

The Know Your Numbers Companion Workbook is the complete practical resource for the book.

It includes examples from Burn Rate Candle Co., the fictional business followed throughout the book, along with blank tools you can use for your own company.

What the workbook includes

• A guided introduction and workbook map

• Burn Rate Candle Co.’s financial examples

• A profit-to-cash bridge

• Simplified financial statement inputs

• A monthly business dashboard

• Contribution analysis for products, clients, and sales channels

• A keep, drop, or reprice decision tool

• A growth return and timing calculator

• Plain-English financial definitions

Follow the money

One of the most important lessons in Know Your Numbers is that profit and cash are not the same thing.

The completed Burn Rate Candle Co. example shows how:

• $42,000 of reported profit

• Became negative $9,000 of operating cash flow

• After inventory, receivables, payables, and depreciation

• And ultimately became $12,000 of ending cash after investing and financing activity

You can change the example numbers, follow the formulas, and then use the blank version to trace the cash in your own business.

Use it to answer real business questions

The workbook can help you explore questions such as:

• Why does my profit not match my bank balance?

• Where is my cash currently tied up?

• Which financial numbers deserve my attention?

• Is a product, client, or sales channel worth keeping?

• What costs would actually disappear if I stopped offering something?

• Will a new machine, hire, or expansion pay for itself?

• Can the business survive the timing of that investment?

• What warning signs are appearing in my numbers?

The workbook does not make the decision for you. It organizes the information so you can see the decision more clearly.

The Smart Monthly Business Dashboard turns your financial reports into a simple monthly operating habit.

Instead of manually calculating every ratio, enter a small set of finalized monthly figures and let the dashboard calculate the rest.

What you enter

• Revenue

• Direct costs or cost of goods sold

• Net profit

• Ending cash

• Accounts receivable

• Inventory or direct labor

• Two major controllable costs

• Cash generated by operations

What the dashboard calculates

• Gross margin

• Net margin

• Accounts receivable days

• Inventory pressure for product businesses

• Direct labor percentage for service businesses

• Major costs as a percentage of revenue

• Operating cash margin

• Profit-to-cash conversion

• Monthly warning points

• A plain-English financial insight

Product and service business settings

Select whether your company is primarily a product or service business.

For a product business, the dashboard focuses on inventory relative to recent sales.

For a service business, it focuses on direct labor as a percentage of revenue.

You can also adjust the warning thresholds to better fit your company.

Smarter financial warnings

The dashboard looks for both individual thresholds and developing trends.

It can help flag issues such as:

• Cash falling below your chosen reserve

• Operations consuming cash

• Customers taking longer to pay

• Gross margin declining over several months

• Inventory or labor pressure increasing

• Major costs growing too large relative to sales

• Net margin falling below your minimum

A warning is just that and requires more insight. It is a prompt to investigate the number, understand what changed, and decide whether action is needed.

This dashboard is an educational decision-support tool and is not a substitute for professional accounting, tax, legal, audit, or lending advice.