This document provides an overview of key accounting concepts like debits and credits, balance sheets, income statements, and cash flow statements. It includes examples of trial balances, income statements, cash flow statements, and balance sheets for a sample company called Barca. Worked examples are provided to illustrate calculating cost of goods sold.
Assessing the Sales Margins in New business modelsJos Feyaerts
Some theoretical concepts
- What make accounting difficult: or the difference between cash and profit
- The accounting canvas, the roadmap of our Fin. Plan
- The estimation of your Margin: it’s all about the margin
- Some Metrics for defining and controlling Margin with focus on SAAS
- Wrap up on margin
New business models and the impact on working capital
- Typology of cash-models
- Impact from License model to SAAS model on Cash
- Impact of the SAAS on investments and cash
- Platformization in BtoB market is at least as important as in BtoC and P2P.
- Some general advises for Starters
Assessing the Sales Margins in New business modelsJos Feyaerts
Some theoretical concepts
- What make accounting difficult: or the difference between cash and profit
- The accounting canvas, the roadmap of our Fin. Plan
- The estimation of your Margin: it’s all about the margin
- Some Metrics for defining and controlling Margin with focus on SAAS
- Wrap up on margin
New business models and the impact on working capital
- Typology of cash-models
- Impact from License model to SAAS model on Cash
- Impact of the SAAS on investments and cash
- Platformization in BtoB market is at least as important as in BtoC and P2P.
- Some general advises for Starters
Financial Workshop - Builders Profitable Marketing Oct 2015 Roshan Fernando
Great presentation for Small Business owners to understand the importance of being able to read financial statements, the difference between profit and cash flow, the power of 1 and basic ratios and percentages to keep an eye on operational performance and cash flow...
Financial Workshop - Builders Profitable Marketing Oct 2015 Roshan Fernando
Great presentation for Small Business owners to understand the importance of being able to read financial statements, the difference between profit and cash flow, the power of 1 and basic ratios and percentages to keep an eye on operational performance and cash flow...
Course material for An introduction to keeping financial records in business for small and medium sized enterprises organised by the Lagos hub of the Global Shapers with support from Abraaj for small and medium enterprises in Lagos NIgeria held in June 2016
The presentation is for the senior engineers of GENCOs. it describes the basics of the business, financial statements, the balance sheet and the profit and loss account. The presentation covers also the measures of performance, the cash flow, the liquidity and the sample balance sheet of GENCO for the year 2004-05
This will be useful if you are in the field of accounting. This topic will be presenting financial statements. It will be beneficial to students who are inclined into, business and accounting
Prepared by: Group 1
Leader:
Bau, Ella Mae G.
Members:
Adem, Angelie Lyka L.
Amper, Catherine Mae S.
Atienza, Trisha Lane M.
Babela, Ma. Ella V.
Bagang, Aleli M.
Bartolome, Kristine Joy G.
Bayani, Emanuel M.
Cabrera, Kathleen Anne A.
CFO Insight For Business Owners: How to Utilize Financial StatementsChase R. Morrison
CFO Insight: This is a primer on how to use financial statements to more effectively operate a privately held business and was used to educate new entrepreneurs at the Valley Economic Development Corporation in Sherman Oaks, CA.
Working Capital Analysis PowerPoint Presentation Slides SlideTeam
Presenting this set of slides with name - Working Capital Analysis Powerpoint Presentation Slides. This complete presentation has a set of thirty slides to show your mastery of the subject. Use this ready-made PowerPoint presentation to present before your internal teams or the audience. All presentation designs in this Working Capital Analysis Powerpoint Presentation Slides have been crafted by our team of expert PowerPoint designers using the best of PPT templates, images, data-driven graphs and vector icons. The content has been well-researched by our team of business researchers. The biggest advantage of downloading this deck is that it is fully editable in PowerPoint. You can change the colors, font and text without any hassle to suit your business needs.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
2. The double entry accountingTOREMEMBER
Asset accounts
D
Increase Decrease
Liability accounts
Decrease Increase
Charges Revenus
P & L Account
3. The concept of a balance sheetExercise1
What I HAVE What I OWE
4. Exercise1
What I HAVE What I OWE
House
Car
Furniture
Equipment
Savings
“Petty” Cash
Mortgage
Car loan
Equipment loan
Invoices
Overdraft
The concept of a balance sheet
5. Exercise1
What I HAVE What I OWE
House 100
Car 10
Furniture 30
Equipment 20
Savings 10
Petty Cash 5
Adding up 175
Mortgage 65
Car loan 5
Equipment loan 10
Invoices 5
Overdraft 10
Adding up 95
The concept of a balance sheet
6. Exercise1
What I HAVE What I OWE
House 100
Car 10
Furniture 30
Equipment 20
Savings 10
Petty Cash 5
Total 175
Net worth 80
Mortgage 65
Car loan 5
Equipment loan 10
Invoices 5
Overdraft 10
Total 175
The concept of a balance sheet
7. Exercise1 The concept of a balance sheet
Assets =Liabilities +Net Worth (Equity)
What about income and expenses?
8. Revenues (Income) 1000
- Mortgage loan repayment 300
- Car expenses 50
- Heating, electricity,… 100
- Various expenses 100
- Taxes and Soc. Sec. 400
Revenuesandexpenses
Net income / Savings 50
Where did the money go?
9. The charges to the P & L
Net Result
TheP&LAccount
Other
operational
income
Gross
margin
Added
Value
Gross ops
profit
Profit before
taxes
Goods
& services
Personnel
-expense
Other ops
expenses
Amortisa
tion
EBIT
Financial
expenses
Taxes
Result of
Operations
Financial
Income &
exceptional
Gross
Profit
Other
income
10. P & L N-1 EURO N
Turnover (1)
Purchased goods
- Inventory
= Cost of goods sold (2)
Gross margin (3)=(1)-(2)
+ Other business related income
= Income from operations (4)
- Goods and services (5)
= Added Value (6)=(4)-(5)
- Personnel expense
- Other operational expenses
= Gross operating income
+ Financial revenues
+ Exceptional results
= Gross total revenue (EBITDA)
- Amort., provisions, depreciations
= EBIT
- Financial expenses
- Taxes
= NET PROFIT
ExceptionalExceptional
OperationsOperations
InvestmentsInvestments
FinancingFinancing
Key elements of a P & LTheP&LAccount
12. The balance sheet of a bank
ASSETS LIABILITIES
Differentbalancesheets
What the bank HAS What the bank OWES
13. Example :
The opening balance sheet of a company
Assets Liabilities
Short term asset Net worth
The methodology of double entry accounting
Doubleentry
21. Barca BARCA Trial Balance
Cash Capital Equipment Supplier Equipment
Sales Stock Supplier Stock Customers
Fees Operations Cost of goods sold Depreciation
Income Taxes Due to Tax Aut. Dividends Due to Shareholders
22. Barca BARCA Trial Balance
Cash Capital Equipment Supplier Equipment
Sales
50,000
156,000
25,000
77,000
48,000
22,000
2,000
Trial balance = 339,600
206,000 174,000
32,000
50,000 25,000 25,000 25,0006,250
18,750
Stock Supplier Stock Customers
Fees Operations Cost of goods sold Depreciation
Income Taxes Due to Tax Aut. Dividends Due to Shareholders
240,000 95,000 80,000 95,00077,000 156,000240,000
48,000 22,000 80,000 6,250
27,600 27,600 6,000 4,000
15,000 18,000 84,000
25. Barca
P & L account (Income statement)
Revenue
Cost of materials
Salaries
Other operating cost
EBITDA
Depreciation
Op. income EBIT
Tax
Net income before div.
26. Barca
P & L account (Income statement) – rounded figures
Revenue 240,000
Cost of materials -80,000 (95-15)
Salaries -48,000
Other operating cost -22,000
EBITDA 90,000
Depreciation -6,250 (25% 25)
Op. income EBIT 83,750
Tax -27,600 (33% EBIT)
Net income before div. 56,150
Net income after div. 50,150
27. Barca
Cash flow
Payments from clients
Cost of goods sold
Salaries
Other op. expenses
Cash flow from ops
Cash flow for investments
Available cash flow
disponibleCapital increase
Dividends
Cash flow from financing
Cash flow
28. Barca
Cash flow
Payments from clients 156,000 (65%240)
Purchase goods -77,000 (95-18)
Salaries -48,000
Other op. expenses -22,000
Cash flow from ops 9,000
Cash flow for investments -25,000
Available cash flow
disponible
-16,000
Capital injection 50,000
Dividends -2,000
Cash flow from financing 48,000
Cash flow 32,000
30. Barca
Balance (rounded figures )
Fixed assets 18,750
Inventory 15,000
Receivables 84,000
Cash 32,000
Total assets 149,750
Capital 50,000
Ret. Earn. 50,150
Net worth 100,150
Tax due 27,600
Payables 18,000
Div. due 4,000
Liabilities 49,600
N.W. &
Liabilities
towards
third parties
149,750
31. Cost of goods sold
Beginning inventory 4,000
Plus Purchases 7,400
Equals : Good available for sale 11,400
Less : Ending inventory 2,000
Cost of goods sold 9.400
Ending inventory
Beginning inventory
Available
For sale
11,400
Pur-
Chases
7,400
Cost of
goods
Sold
9,400
4,000
2,000
Editor's Notes
The following slides are an illustration of what was stated in relation to the EVALUATION OF ASSETS and the impact on the NET WORTH
This is quite a remarkable slide
It shows the P & L statement in a different manner
Look at all this hard work and what is finally left over after taxes
FOR OUR DEALER LESS THAN 1% OF HIS TURNOVER IS LEFT FOR HIM
Now we should really company to what is left over with his initial investment
The return on investment for our car dealer is about 12 to 15 %, in other words it is still worth being a car dealer
Below 7% he better puts his money to fruition somewhere else and enjoy himself rather than working as hard as he is doing
As you can see the Income statement also called the Profit & Loss Account is structured in 4 parts to show income and charges as a result of
Operations
Exceptional items (for instance head quarters have been sold)
The results (positive or negative) of the investments made by the company
The financial cost and taxes
The purpose to structure a P & L that way is to make comparison possible and show if the money is coming from operations or anything else
As you can see the P & L has its own vocabulary
Turnover – cost of goods sold = GROS MARGIN
GROS MARGIN + OTHER BUSINESS RELATED INCOME = INCOME FROM OPERATIONS
INCOME FROM OPERATIONS – GOODS AND SERVICES = ADDED VALUE
ADDED VALUE – PERSONNEL EXPENSE & OTHER OPERATIONAL EXPENSES = GROS OPERATION INCOME
GROS OPERATING INCOME +/- EXCEPTIONAL ITEMS = EBITDA (Earnings before interest and taxes and before depreciation and amortisation)
EBITDA – AMORTISATION & DEPRECIATIONS & PROVISIONS = EBIT (Earnings before interest and taxes)
EBIT – INTEREST AND TAXES = NET PROFIT
You have to get used to both the terminology and the lay-out
Participants should be in a position to put on paper the basics of a balance sheet of a bank
I WOULD SUGGEST ANOTHER EXERCISE HERE ON DEBITS AND CREDITS
THEY FOLLOW THE SAME CONVENTION AS EARLIER BUT A BANKER THINKS DIFFERENTLY THAN HIS CUSTOMER DUE TO THE FACT THAT WHAT REPRESENTS AN ASSET FOR A CUSTOMER IS A LIABILITY FOR A BANK
When a person puts money in his or her account that person increases his or her assets held at the bank
That same transaction for the bank means that the indebtedness from the bank towards the customer increases
The bank will consider that the money of the customer is a liability
When a liability account increases we talk about a CREDIT
Therefore the banker will say to the customer that the account has been credited
When a bank pays by means of the account a telephone bill, this means that the LIABILITY TOWARDS THE CUSTOMER DERCREASES this means a DEBIT
The bank does not think differently than the customer it is just that what the customer puts on his balance sheet as an asset is put on the banker’s balance sheet as a liability and the other way around
When a customer borrows money from the bank this borrowed money is a liability for the customer and an asset for the bank!
When a bank extends a loan this means an asset account that is increased thus a DEBIT and for instance a CREDIT to the treasury account
The key accounts of the balance sheet of a bank are shown on the next slide
Their source is the CSSF and the figures are aggregated figures for the Luxembourg banking system
Source www.cssf.lu
THIS IS THE WAY IT IS DONE
WHEN A ASSET ITEM INCREASES IT MEANS A DEBIT
Say you get a 500 bill that you have to put into your « petty cash » (cash on hand – it is always an asset item in opposition to treasury which is a broader concept and can be either positive or negative) – this would mean an accounting entry which would start as
DEBIT PETTY CASH 500
CREDIT…..500
What you HAVE is an ASSET and when it INCREASES we talk about a DEBIT
What we OWE is a LIABILITY and when it INCREASES we talk about a CREDIT
Debits and credits are conventions and allow for the double entry concept and for the balance of a balance sheet
Example : My telephone bill of 150 comes in – this means that I have A LIABILITY which INCREASES this means that the accounting entry will be
DEBIT ……150
CREDIT ELECTRICITY SUPPLIER 150
We will see later what we credit and debit and how
As stated there is often a confusion due to the bank terminology whereby the bank considers that your asset is its liability
So when YOUR MONEY IN YOUR BANK ACCOUNT INCREASES IT MEANS AN INCREASE OF THE LIABILITY OF THE BANK TOWARDS YOURSELF AND THEREFORE THE BANK TALKS ABOUT THE FACT THAT YOUR EXTRA MONEY MEANS FOR THEM A CREDIT TO YOUR ACCOUNT HELD WITH THEM
But let us forget about banks for now and think like an entrepreneur or a private citizen
Summary
When an asset account increases the convention is that we DEBIT
Wen a liability account increases the convention is that we CREDIT
IN fact, the only thing you need to remember is the first sentence and the fact it is the opposite for the liability accounts
It is therefore essential to know if an account is a asset or liability account
We have general agreed standards for that like in Belgium we habe a Belgian Accounting Plan or a GAAP general accepted accounting practice and each account has a specific number
For instance the 1… accounts are for equity and reserves,; the 6 ….. Accounts are for charges and the 7….. For revenues and so on
The balance sheet of the EIB is based on the IFRS schedule or the International Financial Reporting Standards
Those standards gain universal acceptance and even the USA is leaning towards the use of these standards
It is not an academic issue as the companies quoted on various stock exchanges have to publish their balance sheet according to different schedules which represent quite an expense
The need for a universal lay out and structure is quite obvious
The first accounting entry for a new company would be (not taking into account expenses, notary cost)
DEBIT PETTY CASH or BANK ACCOUNT100
CREDIT EQUITY or DUE TO SHAREHOLDERS100
It balances and we have a debit and a credit
You will notice that you always need the two (a debit AND a credit) and that it is ESSENTIAL to ask yourself if you deal with an ASSET ACCOUNT or a LIABILITY ACCOUNT which is increasing or decreasing
Let us look at a few examples and after that we will have an exercise or two to get it into the fingers
This slide explains BEFORE the example and the exercise that it is a CONVENTION FOR THE REVENUE ACCOUNT OR ALSO CALLED THE PROFIT AND LOSS ACCOUNT TO DEBIT FOR A CHARGE
CREDIT FOR A REVENUE
Example – the payment of a telephone bill would be considered as a charge and would mean a DEBIT to the P&L Account
Example – the payment by a customer you invoiced would be considered as an income and would mean a CREDIT to the P&L Account
Let us have a look at the statement first
The turnover or total sales of the company jumped from 14.104 to 14.690
The gross margin is the difference between goods sold and the cost of goods sold (+/- the inventory level: a decrease in inventory equals an increase in cost of goods sold (convention)
The cost of goods sold for N equals 12.573+141 or in total 12.714 (this way of calculating is conventional but confusing for the participants)
The gross margin went from 1887 to 1976 or in percentage slightly better from 13.38% of T/O to 13.45% (improvements are always small steps!)
Other operation income is all the income generated by the business but which is not core business: car rental for instance
Added value is more an economic concept than an accounting concept: it is the difference between Income from operations less goods and services (electricity bill, water, software)
As shown personnel expense is a different category because of the impact on the operations
Added value less personnel expense less other (unusual operating expenses) provides the gross operating income
PARTICIPANTS SHOULD RETAIN 496 THIS IS IN FACT WHAT THE COMPANY HAS MADE AND WHAT CAN BE USED TO REPAY FOR INSTANCE LONG TERM DEBT
Subsequently we record the amortisation which recognises loss in value of the long term assets and decrease by same token the base upon which the company is going to pay taxes on company income!
This brings us to the EBIT which is a MUCH USED benchmark for comparing companies between each other
Indeed the taxation may be very different from one country to another and taking the net amount might provide a wrong picture on the efficiency and financing strategy of the company
Participants will notice that so much effort and work only results into a NET PROFIT of less than 1% of T/O
However, this figure should be compared with the investment done by the company rather than the T/O
This would make us compare 137 versus the net worth or 673 which is about 20% which is much better than stocks and bonds
From this picture it can also be noticed that with the money made other operating expenses, financial expenses, taxes have been paid and also dividends
The latter can not be seen from the statement
WE WOULD HAVE TO LOOK AT THE NOTES TO SEE THAT
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards
Say we put 100 on the table to start a NEW COMPANY without taking into account notary expenses and other expenses we would have 100 as an asset of the newly founded company and 100 as a liability towards the shareholders
The asset total would be 100 and the liability total would be 100
In other words the asset of the company is 100% financed by the shareholders
A share is a portion of the capital
Say we would be 10 shareholders of the new company with an incorporated capital of 100 it would mean that each shareholder would hold 1/10 or 10
As soon as the company starts his life the assets and the liabilities will vary and the net worth (the difference between the assets and the liabilities) will move upwards or downwards