I hope you've been following my NSE investment series.

 Today, I'll be showing you how to interpret a company's financial report starting with the Income Statement.

 Here's a quick recap of some of the relevant stuffs I have explained before now:

So let's move on to the topic of the day: The Income Statement. Below is a snapshot of Total Nigeria's Income Statement for 2012


Of the 5 parts of a Financial report, 3 are most important: The Income Statement, The Balance Sheet and The Cash Flow Statement.  In subsequent posts I will explain the The Balance Sheet and The Cash Flow Statement.

The Income Statement is also known as the Profit and Loss Statement. It details the company's revenues and expenses for a specified period (1 year for an annual report). It is the most popular Statement in the Financial Report, because it's the report that most easily shows the financial trend of the company. When taken across several reporting years, it shows if the company is growing or not, if the gross margin is improving or not, if the operating profit margin is too slim or not, the effect of non day-to-day (operations) transactions, and the effect of foreign exchange on revenue.

Most Income Statements can be separated into the following lines:
  1. Revenue or Total Sales: This shows the total amount of sales the company made in the reporting period. In the image above, Total made a sale of over 217 billion naira in 2012. That's a lot! That's about 600 million naira a day.
  2. Cost of Goods Sold (COGS): This is the cost of the raw materials used in the production of goods sold. If I sell DSTV dish for N15,000 and bought each dish from the foreign supplier at N10,000 per one. Then I spend N500 to paint it white and brand it as a DSTV dish. My COGS will be the total money it cost me to make the finished product (N10,000 + N500), N10,500. That's my cost of goods sold. The special thing about this is that, I can not afford to sell below that price. My Revenue -- COGS = Gross Margin. In the example above, Total is spending N88 as COGS for every N100 it makes as Revenue. That's a very slim Gross Margin, 12% Gross Margin. All the mouth watering N217 billion revenue is just N26 billion in Gross Profit. And there are SG&A expenses to cater for.
  3. Selling, General and Administrative (SG&A) expenses: This shows what the company spent to get the finished products to the buyer. In Total's case it covers it's cost of running the filling stations, advertising and workers' salaries.
  4. Operating Profit: This is what is leftover after the company has paid all its production and SG&A expenses. Total is obviously in a low profit margin industry. Almost all its revenue is spent on production & operating expenses.
  5. Other Income and Expenses: Occasionally, companies make money from tax refunds, sale of old equipment e.t.c. And they also lose money when someone charges them to court and wins a compensation case against them. That affects the Revenue and must be shown under Other Income and Expenses.
  6. Profit Before Tax: This is the sum of the Operating Profit and Other Income/Expenses the company had in the reporting year. It's the one tax is calculated on.
  7. Tax: The tax the company paid. The corporate tax in Nigeria is 30%. Some pay 2% Education tax.   
  8. Net Profit: The money the company really made. It's what's left after all the official expenses and tax are deducted. This is what we are all interested in seeing that it's going up year after year. Any year a company fails to exceed it's last year's net profit, it's share price (usually) takes a big hit.
And these are what you'll find in most Income Statements. Banks income statements are very different. But same logic runs through: In the end, there's a Revenue, an Operating Profit and a Net Profit.

Next in the series will be -- The Balance Sheet.



Last Saturday, a network marketer showed me a video. 

I have a couple of network marketers trying to convert me: Trevo works, Swiss-Garde is different, NG4L is amazing, come aboard Forever Living Products. But I have a trouble selling products I won't buy. The only reason I will buy a Ginseng flavoured Multivitamin pack of 100 capsules for N2,000 is if it comes with a N1,500 MTN recharge card.



Back to the video. The guy in the video was talking about the low income class, the middle class and the rich. He said we in the low income and middle class are spending our money on liabilities while the rich spend their money on assets. Then he went on to give the strangest definition of assets and liabilities that I've heard. He said, "Liabilities are those things that cost you money. Like your car, your house, the stuffs occupying all the space in your rooms. And that's what the low income and middle income class spend all their money on. While Assets are those things that make you money. And that's what the rich spend money on."

On the surface you might consider him right. The poor spend all their money on things that don't make them richer and the rich spend their money on things that make them richer. That's what he was trying to say. And he would have been faultless if he had just left assets and liabilities out of his statements. Assets don't make you money and liabilities don't cost you money. Surprised? I'll explain.

Assets are what you own. Just as a company's assets consist of it's buildings, fleet of cars, all the goods in its warehouse, equipment and it's factories. They cost the company a lot of money. They are the company's assets, not liabilities. So all you own: your cars, your house, your clothes and every other thing you could sell, even for 1 naira, are your assets.

Then liabilities are what you owe. The money you borrowed from a friend is a liability. The business loan you took is a liability, even though it will make you more money. 

Here's the part most people don't know. Nothing in itself is an asset or a liability, it depends on whether you own it or leased/borrowed it. Money is an asset if it's in form of your salary; you own it. But a liability, if you borrowed it. A house is both an asset and a liability if you bought it via a mortgage (the explanation is a little complex, it's called a Capital Lease). 

How does this relate to being rich and being poor? If your assets exceed your liabilities by about a billion naira, then you're rich. In business, it's called Owners' Equity. Equity = Assets -- Liabilities. And that's how people's net-worth are determined. You put a naira value on all Mr B owns and you deduct all what Mr B owes from it. What you are left with is what Mr B is worth. 

How can you increase your net-worth with the knowledge of assets and liabilities? I don't know. The knowledge only explains what is happening, it can't make anything happen. The only thing you can do is to ensure your liabilities do not exceed your assets. But it's common sense. Every sensible person knows that he's not supposed to borrow more than he can afford to pay. 

But there's the more complicated and potentially rewarding part. It's partially built on a sound knowledge of assets and liabilities, but requires knowledge of a lot of other financial theories. The concept is that you can temporarily increase your liabilities well above your assets, and if done right, you'll end up extremely well off for it. It's called leveraging. It requires a good knowledge of business returns. You should be getting a return that exceeds the cost of borrowing (the leverage), and ensure your loan is not called unexpectedly.

In my series on NSE, I'll go in-depth while explaining how to read a company's balance sheet.



I have a part-time business, you can read more about it here. 

image: metro.co.uk

Yesterday, I began managing my sales invoicing, official expenses, transactions and customers on Quickbooks accounting software. I already have a company website that costs me about N10,000 per year; I will be reprinting another set of business cards; I recently paid N10,000 to get listed on a Business Directory magazine. I recently paid N13,000+ to join a community of professionals online. And now I'll be paying about N30,000 a year for Quickbooks. 

I have been thinking hard about my life. I really want to start my own company and give life to every creative idea I have. And now is the only sure time I have. I have very little to lose. I'm not married. I've got the energy. I've got almost nothing to lose. Maybe I'll lose a steady income and get broke occasionally. But I think it's better now than never.

I'm going all out for it. I'll be taking bigger business bets. I'll be letting go of the cap I have placed on my business expenses. I will spend almost all I have to make the business work. It's already tough and I know it will only get tougher. But I prefer it to being buffeted by the desire to start something big.

I have a long-term plan, a 30 year plan. It's a slightly crazy plan. I divided it into 3 stages. Stage 1 involves me finding the market and building a reputation. I'm in that stage. The only problem is that my market is a sleeping one. People that need my services don't know it. It's like being an exterminator in Nigeria. An exterminator is a professional that helps you get rid of all the rats and insects in your house. Nearly everyone needs the service of one, but no one hires an exterminator. We try to do it ourselves and do a bad job of it. Most of my clients don't know how badly they need me until I do a job for them. One of my favorite client once told me that I would be the first person he'd hire when he starts his company. Most are blown away by the job I do for them. And they get me referrals. Most of my jobs are now referrals and repeat jobs. But they are very infrequent; I'll be dead if I try to live of them.

My new approach is to put in a large chunk of my salary into finding clients and building a strong reputation. I'm fixing my minimum price at N5,000; even if your job requires me to just open Excel for one minute and close it. I would rather do it for free than collect less than N5,000. And I'm now extremely reluctant to do free jobs. I'm paying a lot to be extremely good, to make sure you find me and to pay some fixed monthly costs too. Not to talk of the time gap between jobs, and the price I pay to hang around prospective clients. My part-time job is no longer adding to my income but deducting from it. Every money I get from it goes back to finding the next client and paying fixed costs. Then there are the expensive books I bought. I now know more about finance than the about Electrical Electronics Engineering I spent 5 years to study in the university. Just so I can cater for my biggest client pool -- the finance guys. So I can help them with their financial models, P & L accounts and Reconciliation. Then I'm targeting the stock and investment guys. Some of the books I read are written primarily for Finance and MBA students, making them very expensive.

The goal of Stage 1 is not to earn me big money but to place me at the center of the industry. Then I'll move to stage 2, turning the business into a cash cow. Setting the high hour rates I've seen people charge. And I'll try to build a product I can sell, in order to benefit from economies of scale. A product that will make me money while I focus on other things. And then the final stage: Leverage big time and become a big products-focused company.


But like they say: Plans do often go astray and dreams don't come true. Whatever the case for me, my mind is set.



Whenever I tell people that I have a record of everything I have bought since September 2012, most are amazed and others just give me a "this guy must be crazy" look. 

 Today I'm going to share with you the practical tips that put me on top of my money.
image: dailypracticeblog.com 

 Making a budget is not as tough as most people think. A budget is simply an estimate of the income and expenses for a particular period of time. In our case, a month is good. And you don't need a fortune teller to help you forecast you expenses, there is the amazing "miscellaneous" to help.

 So how did I become good at monitoring and managing my income and expenses? And how can I help you overcome the initial frustration? 

 To have a budget, you need a estimate of your income and your expenses. And it's much better if you have actual past records. And that was where I started from. I started taking down my expenses everyday. I didn't need any special trick to remember my income, the huge expectation that builds up before it finally comes makes it impossible for me to forget my last month's income. And if you have the habit of paying 10% of your income as tithe or donation, you won't have trouble with the income part of your budget plan. 
After taking down my daily expenses for about 3 months, I had a good idea of my monthly expenses. Then I moved on to making a simple budget. One that is so simple I'm yet to break it. I took the average of my monthly expenses for the past 3 months, removed all bad expenses I want to get rid off (buying Orbit and DSTV subscription), then I multiply it by 1.30. That is the money I set aside for the month. The rest I funnel into investment accounts or a project. Warning: I already built an emergency fund that has my 4 months living expense in it; I use this for emergencies that pop up, large unplanned expenses. And that's the first investment you should make: Build a solid emergency fund. If you have a family, put between 6 to 12 months living expense in it.

 Finally, I make it a habit. I have formed the habit of recording my daily expenses before I sleep, I make sure my emergency fund is robust enough, I avoid expenses I'll be ashamed to record, I move out all the money planned for investment the week I get my income (pay myself first), and then I try to grow my passive income sources.

 And it's that simple. Nothing complex. And it works. 
Like most Nigerians, I didn't go to any Nigeria-based foreign school. Schools that advertise in newspapers. Some of the schools I went to had no French teachers and almost all had no music teachers. 

 I have read a lot of economic papers/statements on Nigeria. At first, I took them very personal and found faults in every negative thing said about Nigeria. That a graduate in Nigeria is much less productive than a graduate in US. That our primary schools are filled with unmotivated and poor quality teachers, such that it's not uncommon to find students with Primary School Leaving Certificates who can't read and write well. And the secondary schools are just slightly better. 
I still find faults in these statements but it's because I know of exceptions. Unfortunately, the exceptions are very few. In fact, I used to think I'm an exception, until I met reality. It's almost like starting my education all over after University. I even bought English grammar books. I had to teach myself almost everything from scratch. And to keep in touch with reality, and not the delusion I see around, I joined several global job boards and forums. I'm constantly assessing myself from a global standpoint. How do I stand in the international labour market?
image: guardianlv.com
Every major industry in the world started from the Schools. The internet we are crazy about now has being in existence since the 1960s, used by students in Universities. The entire personal computing industry started in the universities. Most of the big companies started as a student's research project. The multi-billion dollar oil refining industry began as an interest of a University student in finding an alternative to whale oil. The entire aviation industry is the result of over a 1000 years of research publications. If a tree is judged by its fruits, then the universities in Nigeria are not good. 
There are Nigerians who have written world changing research papers, all while in a foreign university. 

 While in my final year, some of us tried to do a real project. Something unique, not done before. Most of us gave up when we saw the task involved. A friend got stuck for months at getting components; the foreign company that sells the components only sell in bulk. Some mechanical students couldn't get the special type of metal/alloy needed for their projects; the only metals in Nigeria are Steel, Aluminium and Iron. A set before us that tried building a car ended up using heavy metals for the car body. Students in Sciences limited themselves to the test equipment they have, mostly old equipment.

 And as for the reason for this. Fingers are pointing everywhere -- the government, the lecturers, the university boards, the students, the parents, no funding, e.t.c. But there's one thing you and I can do. We can let this educational decay die with us. We shouldn't pass it on to the next generation. Ensure your (future) child gets a proper education. Education is only as expensive as books and a teacher. Make sure your child meets the learning targets of every stage of his education. Some of the people we study their works in school were self educated and learned everything they knew from reading. No matter how not-so-rich you are, buy and make your child read quality books. Let him enjoy reading. Be his part-time teacher, if you can't afford one. Don't let us pass on this decay. Learning is not exclusive to the inner walls of an educational institution. By making sure that your child meets the learning objectives of having a primary school education, a secondary school education, and a university education, you're building a new and better educational system for us. Whether you did this by schooling them in the best school on earth, or the almost free one you could afford and supplementing with lots of books and your time. It's a worthy sacrifice. They will replace the current politicians, current lecturers, current labour pool, and current parents. And soon, the exceptional brilliance we see in a few of our contemporaries will become a national norm. And Canadians will come here for their study abroad programs. 

image: forbes.com

To create something that is unique and full of value. That's being a genius.

Talent wins you a competition; genius has no competition. And everyone can be a genius. Forget about what your school reports said about you. Forget about what your teachers said about you. Forget about what your colleagues say about you. Get out of the competition mentality. What you are destined/designed to do is beyond what currently exists and what any other person can conceive. You are different for a purpose. Don't let anyone compare you to someone else. Don't let anyone cage your potential. Don't let anyone tell you how far you can go. Don't let anyone dim your light. 
Unleash your potential. Do something no one is doing -- start a unique blog, start a unique foundation, meet a unique need, stand for a unique value, live the unique life you've always dreamed of. Be a genius.

Then don't stop. Don't give up. The beginning is always the toughest. Even Shakespeare had it rough in the beginning. His plays were considered lame, shaky. Thomas Edison was a master of failure. He had more experience at failing than at succeeding. Michelangelo was a workaholic. He frequently forgot to shower, eat or sleep. Steve Jobs kept rejecting all rejections and made his own chances. Mother Theresa gave her dream her all. She ignored all criticism. Barack Obama wrote the history he wanted to read. No matter how critical we are of Fela's life, he showed us how to stand for what we believe.


If you look at all the people that have changed our world, they have almost nothing in common. Some were obviously not brilliant. What mattered was the life they lived, a very unique life. Each one chose to be a genius. And you too can. It's what your destined for.

I'm able to post one creative article per day, swim (almost) every Sunday, do push-ups almost every other day, do consulting jobs on top of my stressful day job, and, best of all, wake up inspired and sleep happy. All because I chose to be myself.

I embraced the inner me and got myself a lifestyle that is natural. A lifestyle that I don't struggle to sustain; one that even gives me enough resilience to overcome a lot of shocks. Some of my friends don't think it's the best type of lifestyle. I hardly pick phone calls; I sometimes don't reply to messages; and I don't visit anyone.

But it's not originally deliberate. I found out that phone calls give me headache and most people only call me when they need stuffs from me. Plus I hate telling people "No". I have never felt like missing anything by not attending social events nor visiting friends. It's usually the other way round. All my life, I can count the number of times I have asked anyone (including my parents) for help. I would rather trek 5kms than ask a friend for a lift. I'm just wired that way. So, I'm really happy with very few friends.

I don't enjoy chitchats. I always end up spending the night feeling sad about most of the things I've said: Maybe I exaggerated a bit or I bad mouthed someone else. So I avoid moving in the company of people I know, colleagues and friends. The last time I was drunk was when I was 13 years old. I've not taken any alcoholic drink since I was 15. I'm not a food freak. So most parties and outings are not enticing to me.

But the amazing thing is I get along well with everyone. People say I'm a very pleasant guy, that I've got a charming way of stringing words and never short of great ideas.

One day, I gave up trying to be like most people. I embraced my inner self and chose to be the real me. And ever since I began enjoying everyday. It made it look like I have more than 24hrs a day. I began having friends that I get along perfectly with. I became more confident and adventurous. I no longer feel like I'm in someone else's skin, or trying to be someone I'm not. I could connect more with people as I'm no longer ashamed of myself. I began doing more of the things I enjoy. I began moving and living at my own pace. I stopped comparing myself to others. I accepted my uniqueness and focused on making the most of it.

In short, I became me. 



I'm more than one in a million
On earth, we are over 7 billion
But the thought of it is very confusing
Should I see myself as unique and amazing 
Or should I see myself as a speck and dispensable 
Both seem right and undeniable

I used to think about everything
The whole world looked to me as a ring
Everything and everyone is connected
The future is by the present erected
Maybe I'm like every other person
But placed at a different angle to the sun

I used to imagine being someone else
Am I going to have same views and sense
What if everyone was like me
To with the same mind and eyes see
But I often see a part of me in all
As my eyes on the mirror of time fall

I used to think of life centuries ago
What if I was born 900 years ago
No internet, no computers, no iPad Air
And God help me if I was born here
Maybe I'll be same, slightly looney
Trying to convert my brain to money

Then I stopped having those thoughts
Maybe 900 years ago we had no clothes
The life expectancy then would be 20 or less 
Why would I want to be someone else 
My future better depends on more than my present 
And my life is not on the 7 billion dependent

That's a really bold statement I have said there, but I thought well through it and I can assure you that there's not a speck of exaggeration in what I'm going to show you. It's the plain truth. But there's a small bias -- the upgrade is more pronounce in young professionals like me. If you run, full-time, a very large farm in Benue state, the upgrade might not be result-yielding.

 As much as I hate to admit it, more than half of what most people think of us is based on how we look. It's usually unfair, but it's the truth. A lady and I go for an interview as a Network Administrator, we are both dressed well, we both meet the requirements, and though she has more years of experience than me, I end up getting the job. Why? Without trying to verify, the interviewer believes that I will be more willing than her to crawl under tables and climb ladders to get network issues fixed. She losses the job just because the interviewer formed an opinion of her based on her look/gender. And it happens everyday and in every way. People form opinions about us based on our heights, our skin color, our accent, our clothes, our specs (if you wear one, like me) and our perfume.

 You'll see two man walking into Sapetro Towers (at Adeola Odeku, VI). One is dressed in a jeans and shirt, the other is wearing a superb looking grey suit and a shinning dress shoe. The security man greets the one in suit and lets him pass; he stops the one in jeans and begins questioning him rudely. Why? The security man, like every other person, has formed a noble opinion of the suited guy and a much less noble one of the jeans guy.

 People don't just address you based on how you look. They think of you, they give you privileges or deny you privileges, they give you a job or deny you a job, they even decide whether you'll make a good spouse or not based on how you look. And that's pretty much every major thing in your life.

 This is more than just a first impression. They don't just stop at your first look, they keep piling up all your looks they have seen and build a massive opinion of you. Every other thing becomes an adjective. If you've got a sweet voice and smooth talk, but dress shabbily and have a lollipop head (thin neck & big head), you'll be seen more as the smooth talking bum. Chris Rock has this well captured in most of his comedy shows. You can have all the talents in the world and be so good the world can't do without you, yet, if people don't like how you look (with or without dress), you're just some indispensable scumbag. And they'll treat you like that, especially at your back.
image: footage.shutterstock.com

 So upgrade the way you look and you upgrade your life. And I'm not just talking about the way you dress, though that's where I expect you to start from. But improve your complete look. Work on your posture. Exercise more to stop looking like someone going through a mid-life crisis. Look your age or younger. Be agile. It will show in the way you walk and give you a lively outlook. 
If you are extremely lean, you'll have an uphill task creating an extremely good impression. We are wired to link extreme leanness to malnourishment, poverty in cash and brain, and weakness. But the good news is you don't have to do too much to change than: Eat well, lots of protein, do weekly cycling and daily push-ups. And if no strange health reason is the cause, you'll be perfect in just 6 months. You'll have muscle padded broad shoulders, a dream neck, a muscular leg and a nicely toned body. No more lollipop head, flat back, no chest, stick leg, and weak body frame. 

 Then work on your communications skill. Join a Toastmasters club. You don't want to keep sounding like you in Obama's clothes. Now that you've stepped up your look, step up your communications skills. Learn to talk confidently, cohesively and meaningfully. Learn to use your hand and body gestures expertly like an American politician. Learn to talk off-the-cuff. Learn to talk in a way that will still a crowd, arrest a billionaire, amaze your boss, and measure up to your newly improved look. 

 Finally, be more deliberate. Don't just do things because others are doing them. Don't be found on every train of fashion. Think through your clothing decisions, in fact, think through all your decisions. It will make you look more responsible, calm and worthy of respect. And it will somehow show in your look, giving you a charming confident look. And it will make people have a better opinion of you. 

 P.S. If you want to join a Toastmasters club and don't know how, feel free to reach me.
Ever tried creating a table or database in Excel? For most people, entering data and making corrections can be very frustrating in Excel.

 Today, I'll be sharing with you a super easy way to enter data into an Excel table or create from scratch an Excel database. 

 It's so easy that you will stop using Microsoft Word for your database/tables/lists once you try this out.

 I will show you how to enable and start a Data Entry form in Excel that works like magic. Below is a screenshot of what I did with it.




It's like using an interactive tool to create the table. It also allows you to search for any entry, scroll between entries and make corrections easily.

So how do you enable this inbuilt tool in Excel? Very easy. Just follow this steps (I'm hoping you use Excel 2007, 2010 or 2013).

Right-click on the Quick Access Task bar at the upper left corner of Excel. See the image below. You can even right-click on the Save (Floppy Disk) icon.


Click on Customize Quick Access Toolbar


In the "Choose commands from" box, select "Commands Not in the Ribbon" and in the box below, scroll down and select "Form..." Click on the Add button 



And you're almost done. In fact, you won't have to do this set again whenever you want to enable the Data Form tool. You only do this once for every PC you use.

Next is to now enable the Data Form tool itself.

Highlight the table (in my case, I've got just the table headers). And click on the Form tool we just added to the Quick Access Toolbar.



You'll get a dialogbox like the one below if your table has only headers, like mine. Just click on OK.


And Voila! The magic tool pops up. Enter your data entries one by one. Click New when done. You can scroll, Search for a record or make changes to old records.




And that's the magic tool!