Income statement and its analysis.

It is a company's financial statement that indicates how the revenue is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). It is a flow, the information which is represented here is gathered over a certain period of time.

Credit (with +, revenues), Debit (with -, expenses)

Operating section: Revenue, expenses, cost of goods sold, R&D, depreciation, amortization.

Non-operating section: other gains or losses, finance costs (WACC), income tax.

43. The importance of the cash-flow statement and its analysis.

Shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business.

Operating activities- manufacturing, sales, variable and fixed expenses

Investing activities – expansion, replacement of tools and machines, purchase of land

Financing activities – dividends paid, new borrowings, sales or repurchase of own stock, payment on dividend tax.

Why important: in order not to run out of cash but at the same time don’t have excess of money working for shareholders.

44. Measurement and reporting of current & fixed assets.

Current Assets - A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash. Called Working Capital Gross. Net Working Capital = Current assets – Current Liabilities. Measures: Cash Operating Cycle, Operating leverage.

Fixed assets - a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. Fixed assets normally include items such as land and buildings, motor vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery. Fixed assets depreciate. Depreciation is tax deductable.

Date: 2015-02-03; view: 712