20140113 finance workshop_module1_basicconcepts_part2
TRANSCRIPT
3 parts in the regulatory reporting
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Balance SheetP&L or Income
StatementCash Flow Statement
Shows what the business owns, what it owes to lenders & creditors, and other obligations or claims on the assets at a selected point in time
Shows whether a company made or lost money during the period being reported
Shows where the cash that the company used came from and where the cash that the company generated went to during the period being reported
Indication of the overall financial stability of the
company
Indication of the profitability of the
company
Indication of the ability to pay the bills
P&L statement shows the result of the period
Profit & Loss shows in a standardized way how much profit was created
So basically: Revenue – costs
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In ‘000 2012
Net revenue $972,309
Cost of revenue ($125,521)
Gross Margin 846,788
Sales and marketing ($324,896)
Product development ($257,179)
General and administrative ($128,002)
Depreciation and amortization
($79,849)
Operating Profit $56,862
Other income (expense), net ($252)
Provision for income taxes ($57,114)
Net income (loss) $21,610
Example: Linkedin
Compare to: Your Monthly Household Budget
Buy a new car of $30K
Sometimes there is a timing difference between expense and cash out
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Year 1 Year 2 Year 3
Cash -30,000
P&L -10,000 -10,000 -10,000
Balance 20,000 10,000 0
Income Statement - A simple example from personal life
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Month January Income €2,000
Net Salary €1,800
Expense allowance €200
Month January Expenses €1,800
Mortgage (€300 interest + €500 capital) €800
Utilities €200
Food & Beverage €600
Clothing €100
Reduction in car-value €100
Month January Result €200