Sales Variance and Profitability Analysis (Price, Mix, Vol)
- 2.5 hours on-demand video
- 2 downloadable resources
- Full lifetime access
- Access on mobile and TV
- Certificate of Completion
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- What are sales related variances and how do they impact profit of a business? How do these variances help explain business performance?
- How to explain variances resulting from sales price, quantity and product mix differences.
- How to completely explain variance vs budget and previous year in terms of dollar amounts and profit percentage (%).
- How to automate variance calculation in Microsoft Excel so that files can be updated every time a new calculation is required.
- How to summarize variance calculation results in the form of automated graphs/charts.
- How to present the results of variance analysis to management using Microsoft Powerpoint.
- How to analyse and provide recommendations to management based on results of analysis.
- Complete solved Excel files
- A general understanding of sales, cost and profit (Not mandatory).
Do you ever find yourself, in business review meetings, trying to explain the business performance versus budget, or prior period, but not having all the answers? Then, this course is just for you.
Being able to analyse and present the profitability of a business through variance analysis is a key business partnering skill. It can help you identify key business issues and establish your position as a trusted finance business partner to the senior management. This is a must have skill for all finance and business professionals, specially Sales Analysts, Financial Analysts, Accountants, Controllers, CFOs, General Managers and CEOs.
In this course, we take a detailed look at calculating and analyzing variances in sales and gross profit (budget variance analysis and prior period variance analysis), driven by changes in sales prices, sales quantities and product mix. With the help of these variances we will be able to explain precisely the performance gap, both in terms of dollar amounts and profit margin percentages, vs budget and prior period. We will calculate the variances by developing automated Microsoft Excel files. Once all the variances in price, volume, quantity and mix are calculated, we will convert them into charts for presentation, and then analyze in detail each variance. We will also explain performance versus budget and prior year, and then make precise recommendations to improve profitability and business performance.
Here is what you will learn in this course?
- You will be able to explain precisely the variance in amounts for Sales, Cost of Sales and Profit vs budget and vs previous period.
- You will also learn how to explain the variance in Profit margin percentage (%) vs budget and vs previous period, and what impacts the variance in margin points.
- You will learn how to summarize the variance results and present it to management in the form of easy to follow graphs/charts (visualization).
- You will learn how to analyse the results of the variance calculations, and provide recommendations to management (using Microsoft PowerPoint).
- You will start with current period actual sales, cost of sales and gross profit of a company, compared with budget and prior year results.
- You will learn about the hierarchy of sales variances; Sales Price, Volume, Quantity and Mix.
- You will learn how to create Excel templates to calculate all of these variances that are automated and update as soon as new data replaces existing data (this is great for monthly and weekly, or even daily updates).
- You will learn about when to use Selling price, and when to use Profit as a base for calculation.
- There will be quizzes and assignments to test and reinforce your knowledge.
- You will also get downloadable solved variance analysis Excel files, that we prepare during the course lectures.
In summary, by the end of this course, you will be able to explain financial performance vs budget and previous year as a result of changes from sales price, quantities and product mix. You will be able to successfully explain results, and empower decision makers to make informed business decisions based on your recommendations. This will save you a lot of time and effort, and is likely to have a significantly positive impact on your confidence and career growth.
You can achieve this mastery of explaining variances in sales and profitability as soon as tomorrow, or your next meeting, if you take this course now.
So, don't wait and start learning by enrolling for the course, right now.
Hope to see you inside the course!
- Anyone interested in explaining financial performance vs target or previous period driven by sales variances
- Financial Analysts
- Sales Managers and Sales staff
- Sales Directors
- General Managers and Managers of Operations
- CFOs and CEOs
If you are not familiar with the income statement, this lecture will serve as an additional resource to understand what an income statement is and what the major line items on an income statement represent, including net sales, cost of sales, gross profit and expenses.
In this lecture, you will learn the different types of sales variances and how they are related (the hierarchy).
An important questions when calculating sales variances is what base to use for calculating the variance. Should it be Selling price or Profit. This lecture will explain precisely when and why you use each of the two bases for calculation.
You will learn about the different possible scenarios for variance calculation that are used commonly used in businesses.
Learn how to summarise the results of variances in the form of a table that can also be used to create charts and graphs later.
In the 2016 version of Excel, Microsoft introduced the waterfall chart. However, in many companies, still, older versions of Excel are being used. If you are working with one of the older versions of Excel too, then in this lecture, we learn how to manually create a waterfall chart in the older versions which looks exactly similar to the auto-generated waterfall chart in newer Excel versions.
You have learnt all about the variances and how they can be calculated. However, if you cannot tell what they mean, or what actions business needs to take, all this information is of no use. In this lecture, we anlayse all the variances we calculated deeply and summarise them for management. In addition, we ask insightful questions and make recommendations so that management can take decisive action to improve results and profitability. This lecture will truly enhance your business partnership side, which is the most valuable and most sought after skill for the Accounting and Finance professional.
Once you have learnt how to calculate variances and what they mean, light bulbs will go off and you will have many questions to ask; many ways in which you can slice, dice and then present information. In this lecture, we discuss, some of the additional factors that impact a business's sales and profitability. Keeping these factors in mind and performing additional analysis on them will help you go a long way in providing insightful analysis for your business.
Answering a question I receive a lot about what if we sold a new product (that was not budgeted or sold in prior year), or discontinued selling a product which we sold in prior year or was included in the budget. In this lecture I share my recommendation to deal with such a situation in terms of profit $ and % calculation.
Learn how to perform income statement variance analysis versus budget and prior year. Calculate impact on gross profit margin and net profit or EBITDA margin %, using Excel and the example income statement used for analysis in the video.