Financial statements training slides oasis 500 eng ar
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Building Your Income Statement Training
The Entrepreneurial and Investments Projects Development
Company
“Real Time Acceleration of
Entrepreneurial Culture in MENA”
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What are Financial Statements?
• Financial statements are records that provide an indication of a
business’ financial status.
• There are three basic types of financial statements:
– Income statement
– Balance sheet
– Cash-flow statement
• What’s the difference between the three statements?
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Why do You Need to Understand the Financial
Statements of Your Business?
“These statements give the manager information about the strengths and
weaknesses of the business and help analyze the success or failure of
management decision”
Examples??
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Software Development Company Example
• Price of software A = JD 100
• Cost of sale (Commission per sale): JD 20
What is Gross Profit?
What’s my gross profit when I sell one unit?
Revenue 100
Cost of sale 20
Gross Profit 80
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What is gross profit margin?
Revenue 100
Cost of Sales(Comm.) 20
Gross Profit 80
Gross Profit Margin=(80/100)*100%= 80%
Software Development Company Example Cont’d
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Software Development Company Example 2
• Price of software A = JD 100
• Cost of sale of software A = JD 20
• Number of software (A) sold= 500
• Price of software B = JD 200
• Cost of sales of software B= JD 30
• Number of software (B) sold= 300
• Staff Salaries = JD 3,500
• Rent = JD 300
• Electricity = JD 300
• Communication= JD 100
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What is the total revenue from software A, and software B?
Revenue:
Revenue from Software A : 500*100= 50,000
Revenue from Software B : 300* 200= 60,000
Total Revenue = 110,000
Software Development Company Example 2
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What is the cost of sales for software A Software B?
Cost of Sales
Software A : 500*20= 10,000
Software B : 300*30= 9,000
Total cost of Goods Sold = 19,000
Software Development Company Example 2
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What is the gross profit margin for the company?
Revenue from Software A : 500*100= 50,000
Revenue from Software B : 300* 200= 60,000
Total Revenue = 110,000
Cost of Sales
Software A : 500*20= 10,000
Software B : 300*30= 9,000
Total cost of Goods Sold = 19,000
Gross Profit 91,000
Gross Profit Margin=(91K/110K)= 82.72%
Software Development Company Example 2
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General and Admin expenses:
Staff Salaries JD 3,500
Rent JD 300
Electricity JD 300
Communication JD 100
Total G&A expenses = JD 4,200
What is net profit?
What is net profit margin?
Software Development Company Example 2
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Software Development Company Example 2
Revenue from Software A 50,000
Revenue from Software B 60,000
Total Revenue 110,000
Cost of Sales
Software A 10,000
Software B 9,000
Total cost of Goods Sold 19,000
Gross Profit 91,000
Gross Profit Margin 82.72%
Staff Salaries 3,500
Rent 300
Electricity 300
Communication 100
Total G&A expenses 4,200
Net Profit (91,000-4,200) 86,800
Net Profit Margin (86,800/110,000) 78.9%
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The Income Statement
Description JD (Jan-Dec 2012)
Sales 110,000
Cost of Goods sold 9,000
Gross Profit 91,000
Gross Profit Margin 82.72%
General and Admin expenses
Staff Salaries 3,500
Rent 300
Electricity 300
Communication 100
Net Profit 86,800
Net Profit Margin 78.9%
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The Income Statement
The income statement explains how you made your profit or loss over a
specific period of time.
It shows you:
•The revenue earned
•The cost of the goods sold
•The gross profit
•The gross profit margin
•The money spent on marketing products/services
•The expenses to run the company
•The profit/loss made
•The net profit margin
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MONSTER WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended March 31,2011
Revenue $ 261,382
Salaries and related 135,661
Office and general 66,570
Marketing and promotion 57,698
Total operating expenses 259,929
Operating income (loss) 1,453
Interest and other, net (441)
Income (loss) before income
taxes and loss in equity interests 1,012
Provision for income taxes 356
Loss in equity interests, net (578)
Net income (loss) $ 78 $
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Market Sizing - Bottom Up Approach
Market size for a gaming company in Jordan- Freemium model, in order to project monthly
revenue. Assuming that we got 100,000 visitors to the website per month
Facebook Campaign for JD 5K assuming (0.05 per click)= 5,000/0.05
Number of visitors per month = 100,000
Number of registered users = 60,000
Number of monthly active users=18,000
Number of paying users =270
Average revenue per paying user=$3
Subscription revenue per month=$720
Conversion rate to registered users 60%
Conversion rate to monthly active users 30%
Conversion rate to paying users 1.5%
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Market Sizing – Top Down Approach
Market size for an e-payment solution in Jordan in order to calculate monthly
revenue.
People paying bills in Jordan (18-65)= 3 Million
Number of people paying bills with internet penetration = 600,000
Number of potential users = 18,000 (addressable market)
Number of paying users =3,600
Average net revenue per paying user=JD0.3
Revenue month 1=JD 1,080
Internet penetration in Jordan 20%
People with internet penetration who pay bills online 3%
% using the service 1st month 20%