Josh Aharonoff (Your CFO Guy)

Master your Debits & Credits 👇

These are the foundation of double entry accounting…

and are often times the first thing you’ll learn in an into to accounting course.

Many people feel they are a tough concept to grasp at first…

but to me, it’s actually really simple once you understand the logic behind them.

Let’s go through it all from top to bottom.

First..

➡️ What exactly are Debits & Credit?

Debits & Credits are a bit hard to explain because…well

They don’t really represent anything.

It’s just a way of communicating whether an account balance on your P&L / Balance Sheet is increasing or decreasing…

and they must always equal each other, or “balance”.

This is where the famous term “Double Entry Accounting” came from.

➡️ How does Double Entry Accounting work?

Double Entry Accounting pretty much means that every financial event affects 2 or more accounts in your general ledger.

You heard that right…each and every financial transaction.

And those 2 “events” are communicated via debits & credits

➡️ How can you remember when to use a Debit, and when to use a Credit?

OK…so this is where it can get confusing.

But it’s actually really simple if you just understand this formula

ASSET = LIABILITIES + OWNERS EQUITY

This is known as the accounting equation, and means that all financial activity affects one or more of these 3 sections of your Balance Sheet.

So when using debits & credits…

the way Assets go up or down…

is the complete OPPPOSITE for how Liabilities + Owners Equity go up or down.

And this is all you need to memorize 👇

Assets —> ⬆️ go UP with DEBITS ⬇️ Go DOWN with CREDITS

Liabilities + Owners Equity —> ⬆️ Go UP with CREDITS ⬇️ Go DOWN with DEBITS

➡️ What about the Profit and Loss?

The P&L is technically just a more detailed version of an account on your Balance Sheet called Retained Earnings.

Put another way…your retained earnings balance is just an accumulation of your net income / loss rom your P&L.

So just like your Retained Earnings…your Net Income goes UP ⬆️ with a Credit

and DOWN ⬇️with a Debit.

Than means that any P&L account that’s GOOD for your net income (like Revenue)

Will go up by…..?

That’s right - a CREDIT

And things that are BAD for your net income (like COGS / Expenses)

Will go up by…?

Exactly! A DEBIT

===

What do you think? Was that simple enough for you to understand?

When you understand Debits & Credits, you'll not only add value to your career in accounting...

but you'll also add tremendous value in FP&A, as it's important to understand the relationship between account values going up / down on your general ledger.

Let me know what else you would add in the comments below 👇

11 hours ago | [YT] | 59

Josh Aharonoff (Your CFO Guy)

Learn about 77 Types of Accounting 👇

I remember when I first graduated…

I thought Accounting only meant 2 things

Tax, or Audit.

Boy…was I wrong.

Accounting is easily one of the most diverse and versatile fields out there…

With tons areas & industries that you can specialize in.

Let’s dive in to some of my favorite areas of Accounting:

1️⃣ Cash Accounting

Cash is king…right?

Well, that’s especially true if you’re performing “Cash” accounting.

The idea here is pretty simple - you record all money received as income…

and all money paid as an expense.

There are some exceptions here, but that’s the gist of it

2️⃣ Public Accounting

This is where I started my career…and where many feel it’s the best place to launch your career as an accountant.

The main focus here is between 2 fields: Auditing, and Tax, often times for public companies.

The most popular public accounting firms are known as “The Big 4”…which are Ernst & Young, KPMG, Deloitte, and Price Waterhouse Coopers

3️⃣ Forensic Accounting 🕵️

Ever wish you became a private investigator, or a detective, instead of an accountant?

Forensic accounting may be a perfect fit.

Forensic accountants investigate financial discrepancies and fraud, often times working on legal cases to uncover any irregularities with a companies financial records.

4️⃣ Accrual Accounting

Accrual accounting is much more popular amongst bigger companies…

and IMO tells a much better story of what’s ACTUALLY happening.

Here, you treat income EARNED as revenue…

and expenses INCURRED as an expense…

regardless of when cash was received

5️⃣ Operational Accounting

Here’s one of my favorite fields in accounting…

With operational accounting, you’re handling the accounting tasks that relate to “operating” a company, such as…

→ Managing accounts payable

→ Following up on outstanding invoices

→ Processing payroll

and much more

6️⃣ SaaS Accounting

For the most part, SaaS is just another industry, without too many nuances from any other industry…but it definitely has it’s quirks.

For example, with SaaS accounting, there’s a lot of emphasis on deferred revenue, and when something can be recognized as revenue.

Similarly, an extra emphasis is put on calculating KPIs such as Customer Acquisition Cost, Customer Payback, and Net Dollar retention.

7️⃣ Restaurant Accounting

Think you can easily transition to an industry like Restaurant Accounting? Be prepared for a lot of differences.

For example, instead of analyzing dozens of transactions a month…

you may be analyzing thousands of transactions a DAY…

each with their own complexities in reconciling and reporting

===

Those are just 7 of the 77 areas of Accounting identified below…

but even 77 types of accounting is an underestimation - the real number can be much much larger.

What are some other types of accounting you’ve seen?

And which is your favorite?

Let’s us know in the comments below…I’ll go first 🙋

1 day ago | [YT] | 97

Josh Aharonoff (Your CFO Guy)

20 profit ratios that will transform how you analyze any business

The numbers never lie, but you need to know how to read them 📊

📩 Join our newsletter and get all 20 ratios in one cheat sheet 👉 yourcfoguy.kit.com/20-profit-ratios?utm_source=soc…

Let me break down the most critical financial metrics you'll ever need 👇

➡️ CORE PROFITABILITY RATIOS

These ratios tell you exactly how well a business turns revenue into profit:

1️⃣ Gross Profit Margin
The foundation of business profitability - what's left after direct costs.

When this number drops, it's often the first sign of pricing pressure or rising material costs.

2️⃣ Operating Profit Margin
This strips away the noise and shows pure operational performance.

Want to know if a business is actually good at what it does? This ratio tells you.

3️⃣ Net Profit Margin
The bottom line that matters. Shows exactly what you're left with after everything's paid.

4️⃣ EBITDA Margin
Strips out accounting decisions to show true operational performance.

Critical for comparing companies with different capital structures.

➡️ RETURN RATIOS - THE REAL PERFORMANCE INDICATORS

5️⃣ Return on Equity

Your shareholders' report card.
This number can make investors either jump for joy or run for the hills.

6️⃣ Return on Assets
Shows how well a company uses its assets to generate profits.

This ratio becomes crucial when comparing asset-heavy industries.

7️⃣ Return on Capital Employed

The heavyweight champion of performance metrics.
It's like ROE and ROA had a super-smart baby.

➡️ EFFICIENCY RATIOS

Now we're getting to the good stuff…

8️⃣ Asset Turnover
Reveals how efficiently a company generates sales from its assets.

Higher ratios usually mean better operational efficiency.

Think of this as your business's speedometer.
The faster it spins, the more efficient you are.

9️⃣ Inventory Turnover
Critical for retail and manufacturing - shows how quickly inventory moves.

Lower numbers might signal obsolete stock or poor purchasing decisions.

🔟 Accounts Receivable Turnover
Measures how fast a company collects what it's owed.

This ratio directly impacts cash flow - the lifeblood of any business.

➡️ MARKET PERSPECTIVE RATIOS

1️⃣1️⃣ P/E Ratio
The market's expectation of growth packed into one number.

But remember - high P/E isn't always better. It's about whether the company can meet those expectations.

1️⃣2️⃣ EPS Growth
Shows the rate of earnings growth per share.

This becomes powerful when tracked over multiple quarters.

===

Three principles I always follow when using these ratios:

1. Compare within industries - ratios mean different things in different sectors
2. Look for trends - a single number means nothing without context
3. Use multiple ratios - they work together to tell the complete story

Grab it here: yourcfoguy.kit.com/20-profit-ratios?utm_source=soc…

Which ratio do you find most valuable in your analysis?

Share your thoughts in the comments below 👇

4 days ago | [YT] | 140

Josh Aharonoff (Your CFO Guy)

The Accounting FP&A Yin Yang ☯️
they are 2 sides of the same coin 🪙

Accounting & FP&A each contains key responsibilities…
and together they make up your Finance & Accounting 🤝

So often I see these 2 sides clash

But when they work in harmony with one another, great things happen

Here’s an overview on what Accounting does

**Accounting**

🔸Financial Reporting - “closing out” your financial statements in your accounting software (often known as bookkeeping)

🔸AP - coordinating & processing bill payments to vendor

🔸Invoicing - sending invoices to customer, and coordinating collections

🔸Payroll - onboarding employees, approving & processing payroll, coordinating with state tax agencies (parts of this function may be handled under HR)

🔸Taxes - annual federal & state income tax filings, Delaware franchise tax, sales tax (typically not done in house at a startup)

🔸 Audit - coordinate audit with external auditing firm (usually done after Series B)

But that’s just one side of the coin. The other function is just as crucial…

**Financial Planning & Analysis (FP&A)**

🔹 Projections - adding forecasted figures for all areas of the business (revenue, cash flows, ARR)

🔹 Data analysis - analyzing data to optimize for better costing / profitability

🔹 Budget vs Actuals - comparing what you had projected vs what actually took place. (My favorite area of FP&A)

🔹 Board reporting - providing the board of directors with key summaries on what’s happening…another one of my favorites

🔹 Fundraising - wowing investors, and showing them how you’ll be 100x’ing each month for the rest of eternity 🤑

What’s my #1 advice for Finance & Accounting professionals?

LEARN BOTH

There’s so much you can do when you understand how to prepare data, as well as analyze & draw meaningful insights from that data

If you’re an accountant - learn how to build a 3 statement model, or how to prepare a budget vs actuals…or a beautiful dashboard

If you’re in FP&A - learn what debits & credits are…or how cash vs accrual accounting works

I’ve seen few achieve this well, unless you’re a CFO - which would be a require you to learn both

But don’t wait till you’re a CFO. Learn today

Your career depends on it

What would you add?

Let us know in the comments below 👇

5 days ago | [YT] | 98

Josh Aharonoff (Your CFO Guy)

The Ultimate Business Dashboard Every CEO Needs 🤓

7 snapshots that tell you everything happening in your business

...and for the next 48 hours you can get this dashboard for free

Every day our company shares internally a number of dashboards into close to every area of our business.

These dashboards give me QUICK insight into KEY areas of the business...after 30 seconds of consumption, I have a good pulse on everything that's happening.

If you are running a business, there's no way that you can get in the weeds with everything...you need quick snapshots to summarize what's happening.

Here is my preferred set up:

➡️ REVENUE & GROWTH

There are few things that are as important as sales, and growth.

This is especially true if you’re an early stage startup, where revenue & growth is what determines your ability to get more funding from investors

➡️ CASH FLOWS

OK…I said there are few things as important of sales & growth…

cash flows is definitely one of them.

I like to keep track of how much cash is coming in from receivables…

how much cash is going out to employees…

as well as to vendors…

The last thing I want is to be taken by surprise with anything cash related

➡️ PROFIT & LOSS

Your P&L is one of the most useful reports…

and is designed to tell you ONE thing…

how much profit (or loss) you are generating

➡️ HEADCOUNT

Your headcount is one of the most important things to key track of…

Why?

Because it’s often times the LARGEST expense…

and often times the BIGGEST contributor to your success

➡️ PIPELINE SALES

It’s not enough to understand how much you’ve done in sales…

it’s just as important to understand what you have coming in the pipeline.

This can help you prepare resources, cash flows, and much more.

➡️ HIRING

Are you in the process of hiring for a new role?

It’s crucial to stay up to date on what’s happening with the job post…

I like to review this snapshot every morning as we have an active role (which we do - check out our hiring page at Mighty Digits!)

➡️ BUDGET VS ACTUALS

Budgets are a great thing - I don’t care how much backlash that comment gets.

It allows you to create a blueprint for what you think the future will look like…

and then track against that blueprint, understanding whether you need to tweak your assumptions, or whether all is going according to plan.

This is by far my favorite report…I can’t get enough of it.

===

That’s my take on the metrics you should be tracking everyday, and the best way to ingest this information at a quick glance via an attractive dashboard…

but every CEO has their own metrics which matter more to their business / industry.

What metrics are you tracking?

Let me know by joining us in the discussion in the comments below 👇

6 days ago (edited) | [YT] | 49

Josh Aharonoff (Your CFO Guy)

This is the CRAZIEST dashboard I've ever built…

and today I'm giving it away for FREE.

📩 Join The CFO Files newsletter and I'll send you this dashboard for free: yourcfoguy.kit.com/ultimate-dashboard?utm_source=s…

I spent 20+ hours researching, designing, and building this one.

It tells you all sorts of key information, like:

✅ Revenue & Gross Margin

✅ Comparison against budget

✅ Comparison against prior period

✅ Departmental breakdown

✅ Breakdown by cost type

And all of it updates with just ONE CLICK.

Here's how I built it.

→ Step 1, Design Your Dashboard

But don't make the mistake of exporting a P&L straight from your accounting software and sending that to management or investors.

Instead, invest in DESIGN. And when I say design, I mean:

🎨 a cohesive color scheme

🔡 a proper font

🔀 proper alignment and placement

→ Data Structure

Here, we have 4 departments.

👥 General & Administrative

👥 Sales & Marketing

👥 Research & Development

👥 Customer Support

So each department gets its own P&L, segmented by:

1️⃣ Section

2️⃣ Summary Grouping

3️⃣ Account

Then we have a data set for ACTUALS, and another for BUDGET.

That's 8 tabs total. 4 with actuals, 4 with budget.

→ Transform With Power Query

Now that the data's in place, it's time to TRANSFORM it so it's actually easy to MANIPULATE.

That means UNPIVOTING everything with Power Query.

And then we append all the actual tabs together, and all the budget tabs together.

→ Create Relationships In Power Pivot

Power Pivot is the big leagues of Excel. Honestly, I'm still learning a ton about it myself…

What's amazing about Power Pivot is that you can build RELATIONSHIPS between different tables, so you can mix and match when you build your pivot tables.

From there I built a bunch of MEASURES, which work like Excel formulas, except they run on something called DAX.

→ Create Pivot Tables

Now with the data structured and the measures in place, it's time to build the pivot tables.

Honestly, this part is a breeze.

→ Link Up The Dashboards

And now for the grand finale 🪄🎩

With everything else in place, linking up the dashboard is easy.

===

What I love about this one is that I can click any period, YTD, or TRAILING 12 MONTHS, and the whole thing updates instantly.

Grab it here: yourcfoguy.kit.com/ultimate-dashboard?utm_source=s…

Have you ever used a Power Pivot? Think you could build a dashboard like this one?

1 week ago | [YT] | 10

Josh Aharonoff (Your CFO Guy)

9 Ways to Forecast

There are an endless number of methods you can use when forecasting…

📩 Join our newsletter and get instant access here 👉 yourcfoguy.kit.com/9-ways-to-forecast

but they all really boil down to just one of these 9 methods:

1. Six-month historical average

How it works: take the last 6 months value. You can take it one step further by adding a buffer, like a 5% increase.

Why it's useful: the future often blends well with the past, especially in the first few months of projections.

2. Prior month balance

How it works: set your projection to last month's value.

Why it's useful: extra helpful when forecasting the balance sheet for accounts with minimal movement.

3. Percent of revenue

How it works: set your projection to take a percent of revenue.

Why it's useful: as revenue scales, expenses tend to scale right along with it.

4. Dollars per hire

How it works: set a dollar figure for each hire.

Why it's useful: expenses and capex often scale with each new person you bring on.
5. Fixed assumption

How it works: enter any values or schedules you already have on hand.

Why it's useful: for items like insurance or rent where you have a fixed schedule, you can plug them right into your forecast.

6. Year-over-year growth

How it works: take the value from 12 months prior and add a growth factor.

Why it's useful: for companies with seasonality, you can match the schedule from the prior year, and add a buffer if you need to.

7. Annual inputs

How it works: enter your assumptions for the entire year, then divide by 12 for monthly projections.

Why it's useful: a simple, quick way to forecast an entire year.

8. Departmental intake

How it works: sit down with each department head and build a bottoms up budget for their department.

Why it's useful: you collect valuable information you may not have had insight into, and you hold each department head accountable to results and performance.

9. Zeroed out

How it works: forecast 0 going forward.

Why it's useful: helpful when you don't expect any future values in an account, or when you project those values in another account that relates to this one.

===

So which one is the correct one to use?

Well, like most things in life, it depends.

The key is understanding the nature of each account in your general ledger, and how it scales with time, revenue, or headcount.

Most models end up using a combination of all 9 of these approaches.

These are the 9 most common ways I forecast across the 40+ companies I work with.

Grab it here: yourcfoguy.kit.com/9-ways-to-forecast

What have you seen?

Let us know by joining in on the discussion in the comments below 👇

1 week ago | [YT] | 9

Josh Aharonoff (Your CFO Guy)

The 4 Stages of Forecasting
from BEGINNER to ADVANCED

Which stage is your business at🪜?

Every month, I meet with founders who are looking for help around their financial model.

I rarely see a company working with a level 4 forecast…

and oftentimes, founders don’t realize how much more value can be unlocked with just a few tweaks.

Let’s go over each stage, and what to think about as your company scales

🪜 LEVEL 1 - CREATE A REVENUE BUILD (Beginner)

This is where most founders start with a forecast.

This will oftentimes suffice for an early-stage company, as the focus here is simply on the business model and the details behind the blueprint for how the company plans to scale

The key here is to think about these 2 things:

1️⃣ How will INPUTS result in OUTPUTS (eg: an investment in sales reps results in more sales)

2️⃣ What are the SOURCES of your revenue (eg: existing customers vs customers in your pipeline vs new customers)

🪜 LEVEL 2 - ATTACH A PROFIT & LOSS (Beginner / Intermediate)

Your revenue build is important, but it's not the only area of your business you need to think about.

At this stage, you start to introduce other costs.

It's here where you'll also want to attach a dynamic headcount build, showcasing the details behind who is on your team, and who you will hire in the near future.

🪜 LEVEL 3 - INCLUDE A BALANCE SHEET & CASH FLOWS (Intermediate / Advanced)

Most companies report on the accrual basis, especially as they scale.

Under the accrual basis, the amounts reported on your profit & loss won't equate with your cash flows.

It's here where you'll want to implement a 3 statement model showcasing the movements in your Balance Sheet, allowing you to dynamically showcase cash.

🪜 LEVEL 4 - INCLUDE HISTORICAL DATA AND DASHBOARDS (advanced)

This stage involves you importing your existing data around your financial statements, allowing you to understand where you have been, and where you are going, all in one view.

With this data in place, you can refresh your forecast each month, allowing you to tap into limitless dashboards for any business case.

===

So...which stage are you at with your forecast?

It’s never too late to climb the rung and add more value to your company 🪜.

What else would you add?

Let us know in the comments below 👇

1 week ago | [YT] | 8

Josh Aharonoff (Your CFO Guy)

Learn about Deferred Revenue 👇
One of the most IMPORTANT Balance Sheet accounts

Deferred revenue continues to be where most people struggle the most

It can be a real pain to calculate, and an even larger pain in understanding 🤕

Let’s do a deep dive on what it means, and how to reconcile:

➡️ WHAT IS DEFERRED REVENUE?

I’ve seen a lot of definitions for deferred revenue…but I like this one the most:

Deferred Revenue is the $$ amount of goods or services that you currently owe to your customers

That can arise whenever

• a contract gets signed…

• An invoice gets sent…

• Or cash gets collected…

The key thing is that Deferred Revenue gets triggered when “an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or an amount of consideration is due) from the customer”.

For more information on this, see ASC 606-10-45-2 in the bottom right corner of the infographic 🔍

➡️ WHERE DOES DEFERRED REVENUE SHOW UP?

Because it’s something that you OWE…it is a liability, which shows up in your Balance Sheet (typically a current liability).

Deferred Revenue gets amortized via Revenue, which shows up in the income section of the P&L

➡️ WHAT ARE THE JOURNAL ENTRIES?

When receiving payment / sending an invoice:

DEBIT Cash / AR
CREDIT Deferred Revenue

When recognizing revenue from deferred revenue:

DEBIT Deferred Revenue
CREDIT Revenue

➡️ HOW DO YOU CALCULATE DEFERRED REVENUE?

As with all balance sheet, follow the BASE formula

Beginning

+ Additions

- Subtractions
Ending

So in this case…

Beginning Deferred Revenue
+ Invoices / Cash collected
- Revenue recognized
= Ending Deferred Revenue

➡️ HOW DO YOU AMORTIZE DEFERRED REVENUE?

This can be a bit trickier…
and I’ve seen 2 methods as the most common:

☑️ an even monthly split
☑️ a daily split

My favorite is a daily split so I don’t have to deal with cutoff dates…

but keep in mind that may make revenue lumpy for months like February where there are less than 31 days.

===

That’s my take on Deferred Revenue - but there’s a lot more to it!

What would you add?

Let us know by joining in on the comments below 👇

1 week ago | [YT] | 3

Josh Aharonoff (Your CFO Guy)

My month-end reporting used to take me 1 to 2 hours. Now it's one button.

Three dashboards. A KPI view, a comparison against prior period and prior year, and a summary across every period.

They all update at once.

The whole build is in the video.

https://www.youtube.com/watch?v=R5O8x...

Let me tell you what the problem actually was.

I had a profit and loss that looked like everybody else's. Ugly. Boring. Nobody ever wanted to read it.

So I built the three dashboards instead.

But then August rolls around and I've got a fresh export sitting there with new accounts in it. And now I'm hunting through every dashboard, relinking things by hand.

An hour. Sometimes two. EVERY month.

Now I'll be honest with you. Power Query scared me off for years... it just looks like a developer tool.

But all you're really doing is showing Excel the steps you take anyway. Clean this up. Move that around. Drop the totals.

Then you hit refresh and it does the whole thing again for you.

Here's the part that took me longest to work out.

Your P&L is in the wrong SHAPE. Accounts running down, dates running across, numbers sitting in the middle. Easy for a HUMAN to read. Miserable for a formula to touch.

Power Query flips it so every account and every month sits on its own row. And once your data looks like that, a simple SUMIFS can pull anything you want out of it.

And then there's the part I'm proudest of...

When new accounts show up in the export, my model TELLS me. The check goes red, and Power Query hands me a list of exactly which accounts are new and still unmapped.

I map them. I hit refresh. Everything clears.

So that's my whole month-end now. Point at the new data, refresh, map anything new.

Watch me build it here: https://www.youtube.com/watch?v=R5O8x...

How long is your monthly reporting taking you right now? Be honest.

1 week ago | [YT] | 43