Your P&L tells you what you earned.
It doesn't tell you what you kept.
Cash flow ratios do what the income statement can't.
They expose the gap between reported performance and financial reality.
Join my next free live executive masterclass and learn to keep more of what your P&L says you earned → https://t.co/nM1LGQWZUT
Here are 10 every CEO should understand:
Cash Generation
1️⃣ Operating Cash Flow Margin — what percentage of revenue actually becomes cash
2️⃣ Free Cash Flow Margin — what's left after running and reinvesting in the business
Earnings Quality
3️⃣ OCF to Net Income — whether reported profit is backed by real cash
4️⃣ EBITDA to Operating Cash Flow — how much of EBITDA actually arrives as cash
Working Capital Efficiency
5️⃣ Cash Cycle — how many days between paying suppliers and collecting from customers
6️⃣ Working Capital as % of Revenue — how much cash each dollar of revenue consumes
Debt Coverage
7️⃣ Cash Debt Service Coverage — whether operations generate enough cash to repay debt
8️⃣ Cash Flow to Total Debt — How many years to repay total debt with current operating cash
Reinvestment
9️⃣ CapEx to Operating Cash Flow — what share of operating cash gets absorbed by reinvestment
🔟 CapEx Funding Capacity— whether the business had adequate remaining cash flow to fund assets as they age
Profit tells you if the business model works.
Cash flow ratios tell you if the business survives.
♦
Follow @IAmOanaLabes for daily strategic finance.
CFOs get confused about WACC.
CEOs ignore it.
Boards deal with the aftermath..
Join my next free live executive masterclass and learn to put your cost of capital to work in every decision → https://t.co/nM1LGQWZUT
WACC is not your target return.
It's your minimum.
Miss it and you're destroying value.
Miscalculate it and you’re destroying value.
Most CEOs hear WACC and tune out.
But WACC is the benchmark every dollar that moves in your business is measured against.
Here's the reality:
Every dollar you deploy has a cost.
WACC tells you what that cost is.
WACC = (Weight of Equity × Cost of Equity) + (Weight of Debt × Cost of Debt × (1 − Tax Rate))
↳ The average cost of the debt and equity capital funding your assets, your revenue and your entire business.
And yes, WACC shows up everywhere:
✓ Investment decisions
✓ Company valuation (DCF)
✓ M&A analysis
✓ Project approval (hurdle rate)
✓ Capital structure planning
But here's the problem.
WACC is not a magic number.
Here are 5 things it misses:
�� Cost of equity is estimated. Two analysts will rarely reach the same number.
✕ Ignores leverage risk. WACC changes as your debt and equity levels change.
✕ Market-dependent. Rising rates raise WACC despite no change to your business.
✕ Doesn't measure execution. A high return means nothing if management can't deliver
✕ Highly sensitive to input changes. Always interrogate the assumptions behind the number.
Key lesson: WACC shows the cost of funding your business. Not whether your investments will actually beat it.
Pair it with ROIC. That spread is where value creation lives.
Are you using WACC as a real decision tool? Or just a number in your deck?
♦
Follow @IAmOanaLabes for daily strategic finance.
ROI vs ROIC vs ROE vs ROCE vs ROA
Most CEOs use these metrics.
Few actually understand them.
Join my next free live executive masterclass and learn to use the right return metric every time → https://t.co/nM1LGQWZUT
Let’s break it down:
1️⃣ ROI: Return on Investment
• Formula: ROI = (Net Profit / Cost of Investment) * 100%
• Good for: Simple, one-off projects or campaigns.
• Caveat: It ignores the time value of money, so it’s not great for long-term investments.
2️⃣ ROIC: Return on Invested Capital
• Formula: ROIC = EBIT (1-Tax) / (Long-Term Debt + Equity - Non-Operating Cash)
• Good for: Evaluating how efficiently a company uses its invested capital.
• Caveat: If a company has large non-operating cash, this number might look artificially strong.
3️⃣ ROE: Return on Equity
• Formula: ROE = Net Income / Equity
• Good for: Investors who want to know how well their equity is being used.
• Caveat: Be cautious—excessive leverage can inflate ROE, making it seem better than it is.
4️⃣ ROCE: Return on Capital Employed
• Formula: ROCE = EBIT / (Long-Term Debt + Equity)
• Good for: Measuring profitability and efficiency in capital usage.
• Caveat: It doesn’t account for the cost of debt, which can make it less reliable for heavily leveraged companies.
5️⃣ ROA: Return on Assets
• Formula: ROA = Net Income / Total Assets
• Good for: Understanding how effectively a company uses its assets to generate profit.
• Caveat: ROA tends to look lower for capital-intensive industries because it includes depreciation.
The takeaway?
No single metric tells the whole story.
• Use ROI for campaign or project analysis.
• Use ROIC to measure long-term efficiency.
• Use ROE to evaluate equity returns for investors.
• Use ROCE to understand capital efficiency.
• Use ROA to assess how well assets are being used.
♦
Follow @IAmOanaLabes for daily strategic finance.
Senin 24 Agustus 1998, Panglima ABRI Jenderal Wiranto memberhentikan Letjen Prabowo Subianto dari dinas militer sesuai rekomendasi Dewan Kehormatan Perwira terkait kasus penculikan aktivis.
Mayjen Muchdi Pr dan Kolonel Chairawan juga dibebastugaskan terkait kasus yang sama.
The New York Times baru aja ngerilis 100 film terbaik abad ke-21.‼️
Lebih dari 500 orang dari industri film ikut memberikan suara untuk menentukan film-film terbaik dalam 25 tahun terakhir. Posisi pertama ditempati Parasite karya Bong Joon-ho. Disusul Mulholland Drive, There Will Be Blood, In the Mood for Love, dan Moonlight di posisi lima besar.
Daftarnya juga cukup beragam, mulai dari film internasional sampai film Hollywood yang dianggap punya pengaruh besar terhadap perfilman modern. Tapi seperti biasa, daftar terbaik pasti bikin debat. Ada film favorit yang masuk, tapi ada juga film yang menurut banyak orang justru nggak masuk sama sekali.
Kalau versi kalian, film apa yang wajib masuk Top 100?