James Muhato

Purpose in Service and Community

@getwoveo

[James Muhato @Wa_Muhato]

You get your best ideas on Thursday’s

[James Muhato @Wa_Muhato]

You don’t have to believe me. I can prove #communitybanking works

[James Muhato @Wa_Muhato]

Sii Bure

[Wuzwhatitwuz @JerseyMadeMee]

Shedeur Sanders O-line...😩

[James Muhato @Wa_Muhato]

😵‍💫😵‍💫😵‍💫 wow #Lions2025 #AUS

[James Muhato @Wa_Muhato]

@HighTh0ughtss be hope when they remember me it won’t be with the look of absolute wonder with my mouth wide open as I zoned out into the abyss in the middle of this night club

[James Muhato @Wa_Muhato]

Devante Adams <> Aaron Rodger’s 💯

[James Muhato @Wa_Muhato]

#blesstheshuffle

[Diseño Uba srl @disenouba]

The Black ‘Banker Ladies’ Bringing Alternative Finance to Toronto https://t.co/5ONvEBw5NZ

[Chase Dimond | Email Marketing Nerd 📧 @ecomchasedimond]

Email Marketing Metrics 101:

[James Muhato @Wa_Muhato]

@MatthewBerman Amazing my that time is a consideration for improved results

[James Muhato @Wa_Muhato]

@Lions Let’s goo!!!

[The Secret CFO @SecretCFO]

Does your business have a Financial Policy?

If not, you need one.

The Financial Policy is the rulebook that governs how you fund your business. And treat your shareholders.

It’s especially valuable in businesses where there are multiple complex stakeholders.

It provides the framework for making capital structure and balance sheet decisions. Ensuring everyone is working to the same plan.

If you are a Board, you need to have one.

If you are a Shareholder you should demand your Company has one.

If you are a CFO or CEO having one will make your job easier.

By setting clear guardrails you can take the emotion out of corporate finance decision making.

A Financial Policy has 5 Sections:

1. Overall Objective
2. Debt
3. Liquidity
4. Distributions
5. Capital Allocation

1. Overall Objective

Start with what the overall financial objective for the business is.

This will depend on the stage of business, and should speak to the financial risk and return appetite of the business.

Some examples for (illustrative purposes only):

- Dividend Stock: Deliver total shareholder return of at least a 6% premium to the base rate, with a minimum of 50% of after tax profits distributed to shareholders.
- Turnaround: Reduce debt levels to below $700m and Net Debt Leverage to below 3x EBITDA. Then recommence dividends.
- Startup: Maintain a minimum 12 months runway, and grow valuation by 2x each funding round
- PE Backed: Minimum Net Debt: EBITDA of 4x upon entry, maximizing equity value accretion over 5 years
- Prudent Balance Sheet: We never have more than 1.5x EBITDA of debt, and ensure we always have $100m of cash on balance sheet as a minimum.

2. Debt

This should set the rules around how and when you use debt, and sets some limits on how much.

Example Policies:
- Long Term Leverage Target is 3x. <aximum leverage tolerance in the short term is 5x reducing to 4x by 2025.
- Refinance debt a minimum of 18 months before its maturity.
- Prefer fixed rate debt but use interest rate swaps to manage rate risk on floating rate debt where there is arbitrage.
- For internal metric purposes treat all off balance sheet debt as debt.

Metrics that you could include:
- Net Debt : EBITDA Leverage (Target, and Limit)
- Total Balance Sheet Debt $ Limit
- Total Debt (Off & On Balance Sheet)
- % of Floating vs Fixed Rate Debt
- Average Duration of Debt
- Shortest Duration of Debt

3. Liquidity

The rules you set to make sure you don’t run out of money

Example Policies:
- Never hold less than $100m of cash on balance sheet
- Set internal liquidity headroom limit at $200m, with a warning level set at $250m.
- If a 12 month look forward suggests a breach, raise new liquidity from the following sources, in this order: additional working capital facilities, equity, term debt.

Metrics:
- Cash on Balance Sheet
- Total Liquidity Headroom (Cash + Committed Undrawn Facilities)
- Forecast Minimum Headroom (12 Months Rolling)
- Runway (for Cash Burning Businesses)
- Armageddon Survival Buffer: Liquidity Headroom / Avg Daily Sales

4. Distributions

How and when do you return money to shareholders?

Some examples:
- Distribute a minimum of 50% of after tax profits
- Buyback shares before dividends if the P/E ratio is below X

Metrics:
- Dividend % of Earnings
- Dividend % of Free Cash Flow
- Buyback:Dividend Ratio

5. Capital Allocation

How do you make decisions about where and how to allocate surplus capital? How do you prioritize?

Some examples:
- Prioritize capital allocation based on NPV Per $ Capital At Risk ranking by project / options
- First exhaust surplus capital on all growth projects with an IRR of greater than X%
- Appetite for M&A?
- Allocate capital to debt repurchase until Net Debt is below X.

Metrics to use:
- IRR %
- NPV Per $ Capital At Risk
- Payback Period
- WACC

At its simplest a financial policy could be just one sentence.

For example, an SMB owner operator might decide they will distribute 100% of after tax profits as dividends, and never buy any business, and never take any debt. That's enough.

At its most complex (an F500) it could run to several pages or chapters.

The more diverse the stakeholders, the more complex the Financial Policy will be.

The important thing is being deliberate about balance sheet management. Agreeing a framework bespoke to your business with all stakeholders.

Then documenting it.

And then living it.

[James Muhato @Wa_Muhato]

https://t.co/T6rJgzmHJ1

[Aakash Gupta @aakashgupta]

ChatGPT has a new head of product.

But who is Peter Deng?

Here’s what you need to know 👇

[BKR Capital @BKRCapital]

Let’s celebrate @BKRCapital VC Fellow @AlexanderSinora being on @GloryMediaCA’s 30 x 30 list along with other incredible entrepreneurs, athletes, creators, and changemakers. Congrats and keep shining!

#BKR #GLORY30X30 #VentureCapital #BlackExcellence #BlackInTech #BlackFounders

[Andrew Lokenauth @FluentInFinance]

2) @RunWayML:

AI technology allows you to create your own video or movie just by writing an idea. Bring your ideas to life.

With RunWayML, you don't need any filmmaking or editing experience - just your imagination.

AI technology turns your vision into a video.

[Compounding Quality @QCompounding]

15 visuals every investor should know.

1. 120 years of stock market history in one chart:

[James Muhato @Wa_Muhato]

@QCompounding 👋🏿

[Compounding Quality @QCompounding]

This PDF will teach you more than an MBA.

It will even make you smarter than most fund managers.

10.000 (!) pages full of investing wisdom from Warren Buffett, Terry Smith, Howard Marks and many more.

To receive it:
1️⃣ Follow us
2️⃣ Retweet this tweet
3️⃣ Reply 👋 below