Nhoeb sokla presentation slide 2010( what is financial statement)

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Nhoeb Sokla Presentation Slide 2010 on the topic: What is Financial Stetement.

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Nhoeb sokla presentation slide 2010( what is financial statement)

  1. 1. I. WHAT IS FINANCIAL STATEMENT? Kemarak University Financial Statements are record that provides an indication of an individual’s, organization’s, or business’s financial status. There are four basic types of financial statements: balance sheets, income statements, cash-flow statements, and statements of retained earnings. Typically, financial statements are used in relation to business endeavors. The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position. Subject: Corporate Finance By Student: Nhoeb Sokla
  2. 2. II. Definition of each Statements Kemarak University An income statement is a type of summary flow report that lists and categorizes the various revenues and expenses that result from operations during a given period - a year, a quarter or a month. The difference between revenues and expenses represents a company's net income or net loss. The amounts shown in the income statement are the amounts recorded for the given period - a year, a quarter or a month. The next period’s income statement will start over with all amounts reset to zero. While the balance sheet shows accumulated balances since inception, the income statement only shows the amounts earned or expensed during the period in question. 1. Income Statement Subject: Corporate FinanceBy Student: Nhoeb Sokla
  3. 3. 2. Statement of Retained Earnings Kemarak University The statement of retained earnings shows the amount of accumulated earnings that have been retained within the company since its inception. At the end of each fiscal year-end, the amount of net income or loss is added to the opening amount of retained earnings to arrive at the closing retained earnings. Retained earnings can be decreased by such items as dividends paid to shareholders. On the sample financial statements shown below, the statement of retained earnings is combined with the income statement presentation. Subject: Corporate FinanceBy Student: Nhoeb Sokla
  4. 4. 3.Balance Sheet Kemarak University The balance sheet is based on the equation: assets = liabilities + owners' equity. It indicates everything the company owns (assets), everything the company owes to creditors (liabilities) and the value of the ownership stake in the company (shareholders' equity, or capital). The balance sheet date is the ending date of the period or year, and is a continuation of the amounts recorded since the inception of the company or organization. The balance sheet is a "snapshot" of the financial position of the company at the balance sheet date and shows the accumulated balance of the accounts. Assets and liabilities are separated between current and long-term, where current items are those items, which will be realized or paid, within one year of the balance sheet date. Typical current assets are cash, prepaid expenses, accounts receivable and inventory. Subject: Corporate FinanceBy Student: Nhoeb Sokla
  5. 5. 4. Statement of Cash Flow Kemarak University The statement of cash flow provides a look at the movement of cash in and out of a company. These financial statements include information from operating, investing, and financing activities. The cash-flow statement can be important in determining whether or not a company has enough cash to pay its bills, handle expenses, and acquire assets. At the bottom of a cash-flow statement, the net cash increase or decrease can be found. Subject: Corporate FinanceBy Student: Nhoeb Sokla
  6. 6. III. Example of Financial Statements Kemarak University Larean Fashion Company Income Statement For the year ended December 31, 2009 Net Sales Gross Sale…………………………………………………………………………………$500,000 Less: Sale Return & Allowances………………………………………………………………...……............$3,000 Net Sales…………………………………………………………………………………… $497,000 Cost of Goods Sold Merchandise Inventory, Jan 01, 2009……………………..................…………………………….. $142,000 Purchases…………………………………………………............. $250,420 Less: Purchase Returns………………………………………..... $7,500 Net Purchase………………………………………………………… $242,920 Add: Transportation-in………………………………………………………………… $5,000 Net Cost of purchase…………………………………………………………………….. $247,920 1.Income Statement Subject: Corporate FinanceBy Student: Nhoeb Sokla
  7. 7. Kemarak University Cost of goods available for sale…………………………………… $389,920 Less: Merchandise inventory, Dec 31, 2009………….... $190,000 Cost of Goods Sold……………………………………………………………………………..$199,920 Gross Margin…..………………………………………………………………$297,080 Operating Expenses Selling Expenses: Sale salaries expense…………………………………………… $71,200 Advertising expense …………………………………………… $40,000 Depreciation expense, store equipment …………………$5,000 Supplies expense ……………………………………………….. $2,000 Total selling expenses……………………………………………………. $117,200 Administrative Expenses: Office salaries expense ………………………………………… $40,900 Office supplies expense …………………………………………$9,000 Insurance expense ……………………………………………... $2,000 Utilities expense ………………………………………………….. $3,000 Rent expense ……………………………………………………… $30,000 Total administrative expenses…………………………………………. $124,900 Subject: Corporate FinanceBy Student: Nhoeb Sokla
  8. 8. Kemarak University Total operation expenses…………………………………………………. $242,100 Net Income from operation ………………………………………… $54,980 Non Operating Revenue & Expense Interest revenue………………………………………………………………… $500 Net Income …………………………………………………. ………………… $55,480 2. Statement of Retain Earning Larean Company Statement of retain earning For the year ended December 31, 2009 Larean Capital, Jan 01, 2009……………………………………………….. $165,000 Add: Net Income for the year 2009……………………………………… $54,480 Larean Capital, Dec 31, 2009……………………………………………….. $219,480 Subject: Corporate FinanceBy Student: Nhoeb Sokla
  9. 9. 3. Balance Sheet Kemarak University Larean Company Balance Sheet December 31, 2009 Assets: Current Assets Cash………………………………………………………………… $35,320 Note receivable………………………………………………… $30,000 Merchandise Inventory Dec 31,………………………… $190,000 Prepaid Insurance……………………………………………. $150 Total Current Assets………………………………………….$255,470 Fixed Assets Land ………………………………………………………………... $20,000 Acc.Dep,Land…………………………………………………… $9,000 Total Fixed Assets……………………………………………… $12,000 Total Assets………………………………………………………… $267,470 Subject: Corporate FinanceBy Student: Nhoeb Sokla
  10. 10. Kemarak University Liabilities & Owner’s Equity: Liabilities Current Liabilities Accountant payable ………………………….......…………………. $47,990 Owner’s Equity Larean, Capital………………………………………………………….$219,480 Total Liabilities & Owner’s Equity……………………………………...$267,470 4. Statement of Cash Flow Larean Company Statement of Cash Flow For the year ended December 31, 2009 Cash flow from operating activities Receipts: Collection from customers………………………………. $500,000 Interest receive on note receivable…………………… $3,500 Total cash receipt……………………………………………………………..$503,500 Subject: Corporate FinanceBy Student: Nhoeb Sokla
  11. 11. Kemarak University Payment: To supplier………………………………………………….. $242,920 To employees………………………………………………..$112,100 For income tax….......................................................... $554.8 Total cash payment……………………………………………… $335,574.8 Net cash flow from operating activities………………………………………………$167,925.2 Cash flow from investing activities Acquisition of plant assets……………………………… $80,000 Proceeds from sale of plant assets…………………….$7,000 Net cash flow from investing activities ………………………………………………….$73,000 Cash flow from financing activities Proceeds from issuance of common stock…………..$190,000 Payment of dividends……………………………………….$150,000 Net cash flow from financing activities………………………………………………….$40,000 Net decrease/increase in cash…………………………………………. $54,925.2 Cash balance, Jan 01, 2009…………………………………..$165,000 Cash balance, Dec 31, 2009…………………………………………………………… $219,925.2 Subject: Corporate FinanceBy Student: Nhoeb Sokla
  12. 12. IV. Definition of each account Kemarak University Asset: are things of value owned by a business. They are called the resources of the business. Liabilities: are the debts owned by a business. Typically, a business must pay its debts by certain date. Cash: includes money deposits in banks or pay. Note receivable: are the debts, which the customer haven’t paid yet and have been, sighing as a note with a maturity date. Prepaid Insurance: is the paid of insurance in a company for advance and haven’t been realized yet. Land: is ground the company uses to carry on its business or a company invested. Depreciation expense: is the amount of asset cost assigned as an expense to a particular time period. Account payable: are amounts owed to suppliers for goods or services purchased on credit. Owner’ equity: is the share of the business that the proprietor (owner) owns outright. Subject: Corporate FinanceBy Student: Nhoeb Sokla
  13. 13. Kemarak University Gross sales: are the sales of goods in a company during a period time. Sale return: are the goods, which the customers refer it back because of its quality, etc. Net sales: are the amount of cash received after gross sales minus sale return and allowance. Cost of goods sold: are the costs of goods which we sold to the customers. Inventory: are the amounts of goods, which company have in stock or balance. Purchases: are cost of goods buy from supplier. Purchase return: are the amounts of goods, which refer to the supplier. Gross margin: are the profits of net sales minus cost of goods sold. Sale salaries expense: refer to the cost of salaries for employees, who work at sale place. Advertising expense: are the amounts of spend of advertising on newspaper, television, etc. Supplies expense: cost of use supplies during a period time. Office salaries expense: refer to the cost of salaries for employees, who work for administration. Subject: Corporate FinanceBy Student: Nhoeb Sokla
  14. 14. Kemarak University Insurance expense: the cost of spending for using insurance for a period of time. Utilities expense: the cost of using the electricity and water per period. Rent expense: cost of rent a building or land for carry on a business. Net income: a profit of a company, which happened during a period of time. Operating activities: are the earning related activities if a company. Investing activities: ate means of acquiring and disposing of non cash assets. Financing activities: are means if contributing, withdrawing, and servicing funds to support business activities Subject: Corporate FinanceBy Student: Nhoeb Sokla

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