1. Financial Dashboards
Hello, and welcome to Financial Analysis in Power BI. I'm your instructor, Nick Edwards, and I'm very excited to have you here.
2. Expectations
This is an intermediate course, which means you should already be comfortable in Power BI and have a good understanding of DAX. Otherwise, check out these prerequisite courses.
You will learn financial concepts throughout this course, and no experience is needed! If you already know Finance, great! You'll find this course relevant in creating amazing financial dashboards and analyses.
3. Spaero Technology
We will be playing the part of a new financial analyst for a fictional aerospace manufacturing firm called Spaero Technology.
4. The data
The dataset is made up of fictional sales data from 2015 until 2021.
It follows a star schema. In this data model, the Sales_Fact table holds all transactional data for each sale made, and Customer_Dim contains some more of the customer information.
5. Key performance indicators (KPIs)
The goal of financial analysis is to examine the financial performance of an asset or company to drive decision-making and set goals.
Financial analysts use key performance indicators, or KPIs, to measure performance and are useful to keep track of goals.
The KPI we choose will depend on the audience and the business goal. For example, a CEO might be interested in profit, whereas a sales manager might want to know about average revenue per customer.
So it's important to collaborate with the report users before getting started.
6. Objectives and key results (OKRs)
Objectives and key results, or OKRs, is a popular goal-setting framework.
Objectives are the main business goals and provide a focus for the framework.
Key results specify the results of the objective and set benchmarks, and often, key results have a list of initiatives or tasks that need to get done to accomplish all of this.
Within this framework, there is ample opportunity to track KPIs and objectives at every level within a financial dashboard.
7. Objectives and key results (OKRs)
Here is an example of a completed OKR framework. Feel free to pause the video to read through all of it.
8. Profitability
Some of the most important KPIs and OKRs are based on profitability. In fact, Milton Friedman, a world-renowned economist, once said, "The social responsibility of business is to increase its profits."
But what does this mean?
9. Profitability
To understand profitability, we need to know how to calculate net income.
Net income is revenue minus expenses. Revenue is all the income earned by a company. Expenses are all the money the company paid during it's operation.
When net income is greater than zero, it's called profit. This is why net income and profit are often used interchangeably.
When net income is less than zero, it's called a loss, and when net income is equal to zero, it's called break-even.
10. Profitability
Profit Margin is a commonly used ratio in business.
To find the profit margin, divide net income by revenue.
Ratios are great because they normalize a statistic's size into metrics that can be easily compared.
11. Other common KPIs
Revenue, expenses, net income, and profit margin are the beginning of financial measures and KPIs. There are literally an endless amount of KPIs, since they can be tailored by the analyst depending on what is needed.
12. Let's practice!
You now know how to evaluate a company's profitability. Put it to use and create some great KPIs.