Optimist for Accountants FAQs

How does Optimist calculate cash flow?

Optimist calculates the Cash Flow as the movement in Debt and also opening and closing cash at bank.

Formula:

Cash Flow = (Previous Short Term Debt + Previous Long Term Debt - Previous Cash at Bank) - (Current Short Term Debt + Current Long Term Debt - Current Cash at Bank)

When I load my numbers into Optimist I notice that the Retained Earnings for the current year are calculated for me, how does Optimist do this? Can I change this number?

Optimist calculates the retained earnings for the current year by adding the Change in Retained Earnings from the current year Profit & Loss to the retained earnings from the previous year.

No you cannot change this number, however from a data integrity perspective it is important to remember that retained earnings for the current year should be equal to the retained earnings from last year plus the Profit & Loss amount retained

The pop up boxes has 10 lines of detail. What if I have more than 10 items e.g. Overheads?

Optimist is a strategy, what if and analysis tool. It is designed to provide an overview of your business and assist you in the strategic financial management of your business. Details such as a list of all overheads do not aid in this process. Therefore a limit of 10 items of detail has been deliberately set. You should combine like minded items into categories e.g. selling costs.

What if my company is in the Service Industry and does not have any COGS?

Almost all companies do have a Cost of Generating Services (COGS) figure, although this is not always evident from the Profit & Loss. In order to generate revenue a company has costs that are directly related to the generation of that revenue. In the service industry this is usually the cost of paying the people that earn the revenue. This amount should be put into the COGS field not overheads

Why does Optimist assume that all overheads are variable?

From a budgeting perspective most overheads are neither totally variable nor totally fixed. Most overheads are semi variable. Optimist assumes the overheads are variable and allows you to easily change the overheads driver to reflect what you expect the overheads to be.

How can I make more than one change and see the impact? When I make a series of changes, the net change only shows the last change.

The net change feature only shows the impact of the last change. You can make multiple changes through goalseeking, accepting the changes and then selecting net change.

You can also track the changes through the drop down undo / redo icons.

What if my business operates through a trust and has no Share Capital?

Most trusts have beneficiary loan accounts, which in effect are the equity of the trust. It is suggested that the beneficiary loans accounts are loaded into the other equity field and the settled sum into share capital.

We calculate ROCE % differently to Optimist. How do I change the formula for a result?

You can’t change any of Optimist’s calculations. This is a very important issue, the fact that the calculations cannot be changed ensures that an Optimist report can be understood and accepted by an outside party e.g. a bank. The 21,000 users of Optimist are all going to get consistent results.

You can also create your own financial & non-financial ratios in the KPI module.