Apr 27

https://www.youtube.com/watch?v=qDEuHwbiqqE

DEFINITION of ‘Financial Statements’

Records that outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for both the entity and for readers. Financial statements for businesses usually include: income statements, balance sheet, statements of retained earnings and cash flows, as well as other possible statements. Source: Investopedia

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Pedro Marques
PHC-BR International
Skype: chagas-es

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Mar 22

A budget is a plan for your future income and expenditures that you can use as a guideline for spending and saving. Although many Americans already use a budget to plan their spending, the majority of Americans also routinely spend more than they can afford. The key to spending within your means is to know your expenses and to spend less than you make. A good monthly budget can help ensure you pay your bills on time, have funds to cover unexpected emergencies, and reach your financial goals.

Most of the information you need is already at your fingertips. To create or rework your budget, follow the simple steps outlined below to get a clear picture of your monthly finances. You can also use our free online budgeting calculators below to budget for certain specific purchases or events.

1. Add Up Your Income 
To set a monthly budget, you first need to determine how much income you have. Using the worksheet at the bottom of this page, write a dollar figure next to each relevant income source. Make sure you include all sources of income such as salaries, interest, pension and any other income–including a spouse’s income if you’re married.

If you get a salary, be sure to use your take-home pay rather than your gross pay. Taxes are usually taken out automatically, but if they’re not, remember to include them as another expense. If you receive money from somewhere not listed, enter the source along with the amount under “other income.”

2. Estimate Expenses 
The best way to do this is to keep track of how much you spend for one month. The worksheet below divides spending into fixed and flexible expenses. Fixed expenses are those that generally do not change from month to month, such as rent and insurance payments. Flexible expenses are those that do change from month to month, such as food or entertainment. If some of your expenses for one or more categories change significantly each month, take a three-month average for your total.

3. Figure Out The Difference 
Once you’ve totaled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference. A positive number indicates that you’re spending less than you earn–congratulations. A negative number indicates that your expenses are greater than your income. This means you will need to trim your expenses in order to begin living within your means.

Well done–you’ve created a budget. The next step is to track your budget over time to make sure you’re sticking to it. If you find you aren’t able to follow your budget successfully, it may mean that your plan isn’t flexible enough. It can take revisiting your budget a few times to find the balance that works for you.

 

Thank you for watching and stay tuned for more!

Need a place to start? Click here to learn how to build assets.

Just because you watched the whole video there is a free gift waiting for you

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

Check our website: http://www.phcbrinternational.com
Watch our bloghttp://www.businessexpertsonline.net
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Contributor: http://www.practicalmoneyskills.com/
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Dec 08

Investing from the right side of the CASHFLOW Quadrant

When I was a young boy in elementary school, my rich dad was already placing ideas in my head about the differences between the rich, the poor, and the middle class.

“If you want job security, follow your dad’s advice,” he said. “If you want to be rich, you need to follow my advice.”

Rich dad then went on to show me the difference between his investment plan and my dad’s investment plan.

“My business buys assets with pre-tax dollars,” said rich dad as he drew the following diagram.

“Your dad tries to buy assets with after-tax dollars. His financial statement looks like this,” said rich dad.

To sum it up nicely, rich dad combined the two diagrams to highlight the difference between my dad and him.

Playing by different rules

The point that rich dad was making was that even though we live in a free country, not everybody plays by the same rules. The rich have laws of their own that allow them to become richer.

Rich dad went on to teach me that because my dad was an employee, he had to pay his taxes first and then invest. That meant that up to 50 percent or more of his income would be spoken for before he could even begin investing.

As a business owner, rich dad was able to buy assets through his business and then pay taxes on what income was left over. He bought his assets first and paid his taxes later.

“I pay my taxes on net income,” he said. “Your dad pays taxes on his gross income, and then tries to buy assets. Because of that, it is very, very hard for him to achieve any kind of wealth.”

If we were to map this to the CASHFLOW Quadrant, rich dad’s points would look like this:

How my poor dad invested

How my rich dad invested

“Always remember,” said rich dad, “that the rules are different for the different quadrants. Make your decisions about your future wisely. Decide which rules you want to play by.”

Can you do this too?

I try to pass on the bits of wisdom I learned from my rich dad. Today, as my rich dad taught me, I invest through my businesses, and I teach others to do the same.

When I speak on this, invariably people raise their hands and say things like:

  • “But I’m an employee, and I don’t own a business.”
  • “Not everyone can own a business.”
  • “Starting a business is risky.”
  • “I don’t have the money to start a business, let alone invest.”

To these types of statements, I remind people that less than 100 years ago, approximately 85 percent of people in the US did own their own businesses as either independent farmers or small shopkeepers. Only a small percentage of the population was employee-based. I know my grandparents were small business owners.

Today, in just a couple generations, it seems that the Industrial Age—with its promise of high-paying jobs, job security, and pension benefits—has bred the independence out of us.

What do you want to do?

Chances are that you have the potential to be a great business owner if you have the desire to develop the skills necessary. Our ancestors developed and depended on their entrepreneurial skills, and so can you.

If you don’t have a business today, the question is: Do you want to go through the process of learning how to build a business?

You are the only one who can answer that question. That being said, it’s always nice to have a guide along the way. That is why we created Rich Dad Coaching, so you could enjoy the benefits of your very own rich dad, just like I did.

I may have made my own decisions, but rich dad was there to help me process them—and follow through on them—every step of the way. I couldn’t have done it without him, and chances are you can’t do it on your own either.

So, make your decision today, and get the help you need to succeed.

Thank you for reading and stay tuned for more!

Need a place to start? Click here and learn how to build assets.

Just because you read the whole article there is a free gift waiting for you

*Click HERE and it’s a hidden download (here is a hint – think exit….)

Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

Check our website: http://www.phcbrinternational.com
Watch our bloghttp://www.businessexpertsonline.net
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Contributor: Robert Kiyosaki.

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Sep 13

Debt for many people today, is simply a fact of life. It’s the way they pay for just about everything from big-ticket items like homes and cars to daily purchases like gasoline and chewing gum. At its most basic definition, debt is simply an amount of money borrowed by one party from another. Under this definition, debt sounds neither good nor bad. A closer look at the subject provides a more sophisticated way of both viewing indebtedness.

Good Debt
There’s no better example of the old adage “it takes money to make money” than good debt. Good debt helps you generate income and increases your net worth. Four notable examples of good debt include:

1. Technical or College Education
Education has long been synonymous with success. In general, the more education an individual has, the greater the person’s earning potential. Education also has a positive correlation with the ability to find employment opportunities. Better educated workers are more likely to be employed in good-paying jobs, and tend to have an easier time finding new opportunities should the need arise. An investment in a technical or college degree is likely to pay for itself within just a few years of the newly educated worker entering the workforce. Over the course of a lifetime, educated workers are likely to rack up a return on investment measuring in the hundreds of thousands of dollars.

2. Small Business Ownership
Making money is the whole point to starting a small business. Earning income is a primary benefit of entrepreneurship, with being your own boss also a positive result of the endeavor. Not only can you avoid reliance on a third-party to hire you and give you a paycheck, but your earnings potential can be directly improved by your willingness to work hard. With a bit luck, you can turn your drive and ambition into a self-sustaining enterprise and perhaps down the line, an initial public offering (IPO) that results in major wealth.

3. Real Estate
There are a variety of ways to make money in real estate. On the residential front, the simplest strategy often involves buying a house and living in it for a few decades before selling it a profit. Residential real estate can also be used to generate income, by taking in a boarder or renting out the entire residence. Commercial real estate can also be an excellent source of cash flow and capital gains for investors.

4. Investing
Short-term investing provides an opportunity to generate income, and long-term investing may be the best opportunity most people have to generate wealth. The wide variety of available investments from traditional stocks and bonds to alternatives investments, commodities, futures and precious metals (just to name a few) provides an array of choices for just about every need and every risk tolerance.
No Guarantees
While good debt may seem like a great idea, it is important to realize that even the best ideas don’t always work out as intended. A second look at those four “good debt” categories underscores the point.

The Downside of Higher Education
In and of itself, an education is not a guaranteed ticket to wealth and success. A field of study must be chosen carefully, as not all degrees and designations offer equal opportunities in the marketplace. Difficult economic conditions must also be taken into consideration, as lucrative career opportunities will be more difficult to obtain during economic downturns. Workers who are unwilling to relocate to areas where their skills are in demand or unwilling to accept low-paying, entry-level jobs may find their degrees don’t deliver the expected returns.

The Risks of Small Business Ownership
Like any business venture, small businesses run the risk of failure. Hard work, a good game plan and a little bit of luck may all be necessary to help you fulfill the dream of working for yourself.

The Real Estate Money Pit
Until just a few years ago, buying real estate seemed like a guaranteed win for most homeowners, as price appreciation over time was more the norm than not in good neighborhoods. Downward fluctuations in global real estate prices have taught many homeowners that price appreciation is not guaranteed. On the other hand, real estate taxes, homeowners association fees and home maintenance costs last forever.

Investing
Investing can be a complex and volatile process. Just as fortunes can be made, they can also be lost. Do-it-yourself investing isn’t the right path for all investors, and even hiring help doesn’t guarantee a positive result.

Bad Debt
While even “good debt” can have a downside, certain debts are downright bad. Items that fit into this category include all debts incurred to purchase depreciating assets. In other words, “if it won’t go up in value or generate income, you shouldn’t go into debt to buy it.” Some particularly notable items related to bad debt include:

1. Cars
Vehicles are expensive. New cars, in particular, cost a lot of money. While you may need a vehicle to get yourself to work and to run the errands that make up everyday life, paying interest on a car is simply a waste of money. By the time you leave the car lot, the vehicle is already worth less than it was when you bought it.

Put your ego aside and pay cash for a used car, if you can afford to do so. If you can’t, buy the least expensive reliable vehicle you can find and pay it off as quickly as you can. Buyers who insist on living beyond their means and financing a new car should look for a loan with little to no interest on it. While you’ll still be spending a large amount of money for something that eventually depreciates until it is worthless, at least you won’t be paying interest on it.
2. Clothes, Consumables and Other Goods and Services
It’s often said that clothes are worth less than half of what consumers pay to purchase them. If you look around a used clothing store, you’ll see that “half” is being generous. In addition to clothing, vacations, fast food, groceries and gasoline, these are all items commonly bought with borrowed money. Every penny spent in interest on these items is money that could have been used more wisely elsewhere.

3. Credit Cards
Credit cards are one of the worst forms of bad debt. The interest rates charged are often significantly higher than the rates on consumer loans and the payment schedules are arranged to maximize costs for the consumer. Keeping a balance on a credit card is rarely a good idea.

The Gray Area
In between good debt and bad debt is a gray area that generates a lot of controversy. Three hot button topics in this realm include:

Consolidation Loans
For consumers who are already in debt, consolidating higher-interest debt by taking out a loan at a lower rate of interest is a great idea, in theory. In reality, it often just frees up cash flow that consumers use to fund new debt.

Borrowing to Invest
Leveraging, or borrowing money at a low interest rate and investing at a higher rate of return (most likely with a margin account), may appear to investors as a solid way to receive better than expected results. Unfortunately, with it come numerous risks for the inexperienced and the potential hazard of losing a significant amount of money and being required to compensate your broker for the borrowed funds used in trading.

Credit Card Reward Programs
There are some great credit card reward programs available for consumers. The money spent using credit cards can help buyers earn free airline tickets, free cruises, cash back and a host of other benefits. The danger here is that the interest spent on the credit card debt offsets the value of the rewards.

Conclusion
There is certainly an argument to be made that no debt is good debt. Unfortunately, few people can afford to pay cash for everything they purchase. With that in mind, a motto of “everything in moderation” is the right approach to take where debt is concerned. Remember, even “good” debt has a potentially bad downside.

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

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Sep 12

Welcome to our series of videos! In the video of today we answered one question that is most common in between our clients.

How do I manage my finances?

in short:

  • Create a Budget forecast of how much you can spend in a month.
  • Collect receipts of every purchase you make.
  • Create an Income Statement of your finances.
  • Do not spend more than what you make.
  • Learn the difference between Good debt vs Bad Debt.

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

Check our website: http://www.phcbrinternational.com
Watch our bloghttp://www.businessexpertsonline.net
Like our page: https://www.facebook.com/PHC.BR.International
Follow us: https://twitter.com/PHC_BR

 

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Aug 25

This is by far one of the simplest explanations on the subject of finances out there. Today you learn the difference between gross profit, operating profit and net profit.

Credits for Khan Academy

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

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Aug 07

Definition of Cash Flow Statement

One of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter.

Because public companies tend to use accrual accounting, the income statements they release each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, this contract would be recognized as revenue (and therefore income), but the company may not yet actually receive the cash from the contract until a later date. While the company may be earning a profit in the eyes of accountants (and paying income taxes on it), the company may, during the quarter, actually end up with less cash than when it started the quarter. Even profitable companies can fail to adequately manage their cash flow, which is why the cash flow statement is important: it helps investors see if a company is having trouble with cash.

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

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Jul 26

Income Statement  definition: A document generated monthly and/or annually that reports the earnings of a company by stating all relevant income and all expenses that have been incurred to generate that income. Also referred to as a profit and loss statement.

The income statement is a simple and straightforward report on a business’ cash-generating ability. It’s a scorecard on the financial performance of your business that reflects when sales are made and expenses are incurred. It draws information from the various financial models such as revenue, expenses, capital (in the form of depreciation) and cost of goods.

By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result, which is either a profit or a loss. It differs from a cash flow statement because the income statement doesn’t show when revenue is collected or when expenses are paid. It does, however, show the projected profitability of the business over the time frame covered by the plan. For a business plan, the income statement should be generated on a monthly basis during the first year, quarterly for the second and annually for the third.

Your income statement lists your financial projections in the following manner:

  • Income includes all the income generated by the business.
  • Cost of goods includes all the costs related to the sale of products in inventory.
  • Gross profit margin is the difference between revenue and cost of goods. Gross profit margin can be expressed in dollars, as a percentage, or both. As a percentage, the GP margin is always stated as a percentage of revenue.
  • Operating expenses include all overhead and labor expenses associated with the operations of the business.
  • Total expenses are the sum of cost of goods and operating expenses.
  • Net profit is the difference between gross profit margin and total expenses. The net income depicts the business’ debt and capital capabilities.
  • Depreciation reflects the decrease in value of capital assets used to generate income. It’s also used as the basis for a tax deduction and an indicator of the flow of money into new capital.
  • Earnings before interest and taxes shows the capacity of a business to repay its obligations.
  • Interest includes all interest payable for debts, both short-term and long-term.
  • Taxes includes all taxes on the business.
  • Net profit after taxes shows the company’s real bottom line.

Although the basics of an income statement are the same from business to business, there are notable differences between services, merchandisers, and manufacturers when it comes to the accounting of inventory.

For service businesses, inventory includes supplies or spare parts–nothing for manufacture or resale. Retailers and wholesalers, on the other hand, account for their resale inventory under cost of goods sold, also known as cost of sales. This refers to the total price paid for the products sold during the income statement’s accounting period. Freight and delivery charges are customarily included in this figure. Accountants segregate costs of goods on an operating statement because it provides a measure of gross profit margin when compared with sales, an important yardstick for measuring the firm’s profitability.

For a retailer or wholesaler, cost of goods sold is equal to total inventory at the beginning of the accounting period plus any merchandise purchased, including freight costs, minus the inventory present at the end of the accounting period. This is your total cost of goods sold.

Although manufacturers account for cost of goods sold in the same manner as merchandisers by reporting beginning and ending inventories, as well as any purchases made during the accounting period, their approaches are also different because they track inventory through three phases.

  1. Raw material is purchased to create a finished product.
  2. Work-in-progress is inventory that is partially assembled.
  3. Finished products are inventory fully assembled and available for sale.

Associated with this process are other costs, such as direct labor and factory overhead. To account for all these costs, manufacturers usually report them on a separate statement called the “cost of goods manufactured.” This statement is formed by first listing the work-in-progress inventory at the beginning of the accounting period. The next listed are raw material and direct labor. The total cost of materials available for use includes inventory at the beginning of the accounting period plus new purchases and freight charges. Subtract the raw material inventory present at the end of the reporting period from the cost of material available for use to determine the cost of materials used. Add direct labor and manufacturing overhead to this amount. This results in your total manufacturing costs. Add the work-in-progress beginning inventory present at the end of the accounting period. This supplies you with the cost of goods manufactured.

In the income statement for manufacturers, cost of goods manufactured is added to the finished goods inventory at the beginning of the inventory, resulting in total cost of goods available for sale. The finished goods inventory present at the end of the reporting period is subtracted from this amount to produce the cost of goods sold.

When comparing several income statements over time, you can chart trends in your operating performance. This helps you chart future goals and strategies for sales, inventory, and operating overhead.

 

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

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Watch our blog: http://www.businessexpertsonline.net
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Source: http://www.entrepreneur.com

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Jul 21

Definition of Balance Sheet:

A financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

The balance sheet must follow the following formula:

Assets = Liabilities + Shareholders’ Equity

It’s called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders’ equity).

Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses.

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Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

Check our website: http://www.phcbrinternational.com
Watch our blog: http://www.businessexpertsonline.net
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Follow us: https://twitter.com/PHC_BR

soucer: http://www.businessinsider.com

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Jul 14

Do you know what is a balance sheet?
Do you know what is an income statement?
Do you know what is a cash flow statement?
Good.

Now you are becoming aware of more opportunities and eventually you will improve the quality of your life!
Thanks for watching this video and stay tune for more.

If you enjoyed this post please comment and share if you want more content like this.

Pedro Marques
PHC-BR International
Skype: chagas-es

Click here to work with me personally.

Check our website: http://www.phcbrinternational.com
Watch our blog: http://www.businessexpertsonline.net
Like our page: https://www.facebook.com/PHC.BR.International
Follow us: https://twitter.com/PHC_BR

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"If something is going to affect your life, it's best to know as much as you can about it." - Donald J. Trump
 

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