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BUSFIN Lesson 6 Part 1

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6 views

BUSFIN Lesson 6 Part 1

Ppt

Uploaded by

Marcelino Ordinario
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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LESSON 6:

FINANCIAL STATEMENTS
AND STATEMENT ANALYSIS
BUSINESS FINANCE
OFFICE SCENE
Pretend that you are working as finance manager for
a manufacturing firm. The factory building,
equipment, and people like a whole movie playing
in front of you. The story is going so well until your
boss asks you to show him a summary of results on
how the company has fared in terms of financial
performance in the past six months. Essentially, he
is asking you to give a mid-year review. YOU ARE YOUR HOME
OFFICE SCENE
You almost hear the boss shouting: “ I want to know
everything! I want to know the sales, expenses, cash
on hand, cash on bank, accounts,…. Everything!”.
You freeze because it seems that the only word that
you heard him say was “everything.” Before you
could say anything else, the scene gets more
exciting. “ I would like to see the reports no later
than tomorrow afternoon.” YOU ARE YOUR HOME
FINANCIAL STATEMENTS
• a record which gives the users a picture or
description of how an individual, a business, or
an organization is in terms of financial health
• prepared either quarterly, semiannually, or
annually.
• report a variety of complex information that
users will be able to assess. YOU ARE YOUR HOME
THREE TYPES OF
FINANCIAL STATEMENTS
I. Statement of financial position (balance sheet)
▪ everything of value that the company owns, debts, and the money
invested by the owner.
II. Statement of comprehensive income (income statement)
▪ revenue that the firm has earned over period of time, the expenses,
profit earned, and the result of operations.
III. Statement of cash flows
▪ cash received and cash spent by the firm over period of time.
YOU ARE YOUR HOME
STATEMENT OF FINANCIAL POSITION
Current Assets Current Liabilities
Cash and cash equivalents Accrued Wages and Taxes
Account Receivable Accounts Payable
Inventory Notes Payable

Fixed Assets Long-term Debt


Plant, Property, and
Equipment Shareholder’s Equity
Common Stock + Retained
Earnings
Total Assets Drawings

Total Liabilities and


Equity

YOU ARE YOUR HOME


STATEMENT OF FINANCIAL POSITION
ASSETS LIABILITIES AND SHAREHOLDER’S EQUITY
Current Assets Current Liabilities
Cash and Cash Equivalents 6500 Accounts Payable 350
Accounts Receivable 750 Notes Payable 1300
Inventories 800 Total Current Liabilities 1650
Total Current Assets 8050
Non-current Liabilities 800
Net Fixed Assets Long-term debt 2450
Plant and Equipment 9600 Total Liabilities
(Net of Depreciation)
Shareholder’s Equity
Common stocks 4000
Retained Earnings 11200
Total Assets 17650 Total Liabilities and Shareholder’s Equity 17650

YOU ARE YOUR HOME


STATEMENT OF COMPREHENSIVE INCOME
Comfy Inc.
Statement of Comprehensive Income
For the Year Ending 31 December 2019
(in thousands)
Revenue 18750
Less: Operating Costs (Expenses) 5200
Depreciation and Amortization 3150
Total Operating Costs (Expenses) 8350
Earnings before Interest and Taxes (EBIT) 10400
Less: Interest 1050
Earnings before Taxes (EBT) 9350
Less: Taxes (30%) 2805
Net Income 6545
*Based on the Philippines tax law (30%)
YOU ARE YOUR HOME

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