Accounting as a management tool: reading and interpreting Balance Sheet and P&L Statement How do you read and interpret your two key accounting documents? What can you learn about your partners and competitors from their balance sheet/P&L Statement? Created for non-professionals in accounting, this workshop intends to give a general knowledge to the starter of what accounting is and how to use accounting as a management tool.

1. Finance for Startups
Accounting
Martin van Wunnik
Xavier Corman
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 1

2. Sponsors
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 2

3. Accounting as a management tool:
reading and interpreting Balance
Sheet and P&L Statement
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 3

4. Workshop
• Balance Sheet
• Profit & Loss Statement
• Live Interpretation of public figures
• Q&A
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 4

5. This presentation is available for free
www.slideshare.net/xaviercorman
www.slideshare.net/FinanceCoach24
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 5

6. Who we are ?
Martin van Wunnik
Xavier Corman
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 6

7. Accounting: notions
• Balance Sheet – Bilan – Balans
• Profit & Loss – Compte de résultat – Winst-en Verliesrekening
• Cash-flow – Trésorerie – Schatkist
• Financial Plan – Plan financier – Financieel Plan
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 7

8. Obligation to publish
All companies have to publish their balance
sheet and profit & loss every year at the Belgian
National Bank (BNB/NBB)
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 8

9. Who will read your B-S/P&L ?
• Suppliers
• Clients
• Competitors
• Creditors (Banks, investors)
• Rating agencies (Graydon, Dun&Bradstreet,
Coface, etc.)
• Fiscal administration
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 9

10. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 10

11. ACCOUNTING
=
COMMUNICATION
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 11

12. Principles
To gain confidence with your relations, your
figures must
Reflect the reality
Be constant from a year to another
Communicated on time
-> CHOOSE A GOOD ACCOUNTANT !
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 12

13. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 13

14. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 14

15. Accounting: Balance Sheet
ACTIVE PASSIVE
Equity
(Capital+reserves)
KPI: Non Current Assets
LT Debts/ (Actifs Immobilisés)
Non Currents
Assets LT Debts
KPI:
Debt/Equity
KPI:
Current Assets
ST Debts/
(Actifs circulants) ST Debts
Currents Assets
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 15

16. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 16

17. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 17

18. 20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 18

19. KPI
Debt/Equity 2010: EUR 7,2 M/EUR 6,6 M = 1,09
Debt/Equity 2009: EUR 7,7 M/EUR 6,8 M = 1,13
ST Debts/Current Assets 2010: EUR 0,5 M/EUR 9,2 M = 5 %
ST Debts/Current Assets 2009: EUR 0,5 M/EUR 10,4 M = 4,8 %
LT Debts/Non-Current Assets 2010: EUR 5,5 M/EUR 7,0 M = 78,5 %
LT Debts/Non-Current Assets 2009: EUR 5,2 M/EUR 6,7 M = 77 %
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 19

20. Accounting: Profit & Loss (P&L)
COGS (Cost of Sales)
General Expenditures
Personnel Costs
Revenues (Sales…)
Depreciation
Financial cost
Profit
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 20

21. GROSS MARGIN –
GENERAL
EXPENDITURES
PERSONNEL COSTS
DEPRECIATION
FIN. REVENUES
FINANCIAL COSTS
LOSS
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 21

22. ICAB: some KPIs
• Turnover : not communicated
• Gross margin: EUR 63K (2010) from EUR 83 K (2009)
• EBITDA 2010: EUR -367 K + EUR 257 K = EUR -110 K
• EBITDA 2009: EUR -290 K + EUR 234 K = EUR – 166 K
• ROE 2010: negative
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 22

23. Comparison
You have to compare figures with
Previous years
Competitors
Similar companies
Similar industries
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 23

24. ORGANICAL
+ DECLINE
GROWTH
- BANKRUPCY RECOVERING
- +
EBITDA
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 24

25. Next Workshops
Venue : ICAB (Brussels)
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 25

26. Questions & Answers
Free download:
http://www.slideshare.net/xavierCorman
http://www.slideshare.net/FinanceCoach24
20/03/2012
07/02/2012 Xavier Corman | Martin van Wunnik 26