Financial statements sr


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Financial Statements - Special Report

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Financial statements sr

  1. 1. FinancialStatements Rhea G. Jardin SPENTREP S10
  2. 2. Three (3) Financial StatementsThe financial statements (FS) show thefinancial health of a business1. Profit and Loss2. Cash Flow3. Balance Sheet
  3. 3. Profit and Loss Statement• Summarizes the revenues, costs and expenses incurred during a specific period of time (quarterly, fiscal, year)• Provides information that shows the ability of a company to generate profit by increasing revenue and decreasing costs• Also known as “income statement” or “income and expense statement”
  4. 4. Profit and Loss Statement
  5. 5. Cash Flow StatementCash Flow:• A revenue or expense stream that changes a cash account over a given period• Essential to solvency of a companyStatement of Cash Flow:• Shows the amount of cash generated and used in a given period• Indication of a company’s financial strength• It helps investors see if a company is having trouble with cash
  6. 6. Cash Flow StatementCash Activities (inflows / outflows):1. Operations - Depreciation expenses - Deferred taxes - Account receivables / Account payables2. Investing - Investing of excess cash in different investments (stocks/bonds) - Buying or selling of subsidiaries - Acquisition/dispose of physical property such as PPE3. Financing - Long term liabilities - Stockholders’ equity - Dividend payments
  7. 7. Cash Flow Statement
  8. 8. Cash Flow StatementFour (4) steps in managing cash flow1. Measuring cash flow - Prepare cash flow projections - Know when payments, interest earnings, collections and other sources are going to get in - Detailed knowledge of amounts and dates of upcoming cash outlays (rent, inventory, wages, utilities, debt payments)2. Improving receivables / speed of collection - Offer discounts who pay bills rapidly - Ask for deposit payments at the time of order - Require credit checks on noncash customers - Track accounts receivables to identify and avoid slow-paying customers
  9. 9. Cash Flow Statement3. Managing payables - Take full advantage of creditor payment terms - Use electronic fund transfer on the last day they are due - Communicate with your suppliers if you need to delay payments - Carefully consider vendors’ offers of discounts for earlier payments - Don’t always focus on lowest price when choosing suppliers – consider flexible payment terms4. Surviving shortfalls - Be aware of cash shortfalls as early and as accurately as possible - Choose the bills you’ll pay carefully (payroll, crucial suppliers)
  10. 10. Balance Sheet• Summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time• A tool to calculate the net worth of a business (financial ratios)• The 3 segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders• It is called such because the two sides balance out Assets = Liabilities + Shareholders’ Equity
  11. 11. Balance Sheet
  12. 12. Sources•• The Ins and Outs of Cash Flow Statements• How to better manage your cash flow,•