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Engine90 Suuberg FINANCIAL STATEMENTSD
Engine90 Suuberg FINANCIAL STATEMENTSD
Cash Flow
The Big Three
Statements
• Cash Flow Statements
• A report of all a firm’s transactions that involve
– These answer the important managerial question cash
“do I have enough cash to run my business”
• The key elements are revenues (money flowing
• Income Statements
in) and expenses (money flowing out).
– This is the financial sheet that tells you if your
company is profitable or not. • Cash flow statements compare the sum of the
• Balance Sheets
revenues to the sum of the expenses on a
regular time basis – usually monthly.
– How much debt do I have? How large are my
assets? This sheet tells you the answer to these
Manning Electronics” (Engineering 9) – Did Ms. Manning
questions. have enough cash to buy that piece of equipment for her
boat business?
expenses below – you get the following three month “Receipts” is the sum of all the REVENUES (inflow)
SALES $0.00 $0.00 $1,000.00
firm’s sales and interest it INTEREST $239.27 $167.04
cash flow statement for a hypothetical startup: collected that month
RECEIPTS $0.00 $239.27 $1,167.04
Calculating Depreciation
EBIDT • Continue depreciation on items purchased in earlier
years, using previously established methods
Your EBIDT (Earnings Before Interest Depreciation • Sum up all of that fiscal year’s capital expenses
and Tax) is • Decide which method of Depreciation your firm
wants to use (Straight Line or Accelerated)
Total Revenues – All Costs that are not depreciable
• Determine the useful lifetime for the assets
EXPENDITURES (outflow)
MATERIALS COST AND MFG. LABOR • Determine the salvage value
Non-depreciable Costs SALES COMMISSIONS
COST OF GOODS SOLD (COGS) • Use the formulas to calculate depreciation on new
GROSS MARGIN equipment
SALARY AND BENEFITS OF CEO
SALARY AND BENEFITS OF ASSISTANT • Add up all depreciation contributions
RENT
TELEPHONE AND OTHER
ADVERTISING
Capital Equip. (Depreciable Costs) EQUIPMENT
NOTE: while EBIDT may be a monthly figure – since
TOTAL FIXED COSTS
• Then multiply the profit before taxes by your effective SALARY AND BENEFITS OF CEO
SALARY AND BENEFITS OF ASSISTANT
$3,000.00
$2,000.00
$3,000.00
$2,000.00
$3,000.00
$2,000.00
$3,000.00
$2,000.00
tax rate – that will give the corporate income taxes RENT
TELEPHONE AND OTHER
$500.00
$75.00
$500.00
$75.00
$500.00
$75.00
$500.00
$75.00
ADVERTISING $2,000.00 $2,000.00 $2,000.00 $2,000.00
the firm owes. EQUIPMENT
TOTAL FIXED COSTS
$0.00
$7,575.00
$0.00
$7,575.00
$0.00
$7,575.00
$0.00
$7,575.00
Accumulated Interest Expenses $ 6,800.00 MONTHLY CASH FLOW $11,164.14 $16,310.66 $22,328.62 $31,771.65
AFTER TAX PROFIT $ 28,307.82
ENDING CASH BALANCE $20,557.84 $36,868.50 $59,197.12 $90,968.77
EBIDT* PROFITS $11,164.14 $16,310.66 $22,328.62 $31,771.65 Accumulated Interest Expenses $ 6,800.00
Earnings After Accumulated Interest $ 21,507.82 CUMULATIVE EBIDT* PROFITS ($14,442.16) $1,868.50 $24,197.12 $55,968.77
Depreciation Expense for Tax Purposes $4,500.00
EBIT Profits $51,468.77 Earnings After Accumulated Interest $ 21,507.82
Taxes $23,160.95
EBI Profits $28,307.82
Current Assets
Cash on Hand $ 90,968.77 $ 85,000.00
• Examples of Liabilities include: Accounts Receivable
Inventory
$
$
-
-
$
$
-
-
Prepaid Expenses $ - $ -
– Short Term Debt (loans) Total Current Assets $ 90,968.77 $ 85,000.00
Current Liabilities
Interest Payable $ 6,800.00
Short-term loans $ - $ -
• The difference between Assets and Liabilities is your Accounts Payable
Income Taxes Payable
$ - $
$23,160.95 $
-
-
$
29,960.95 $
85,000.00 $
-
85,000.00
Financial statements
prepared -- balance
sheet & income
statement
Cash Notes
Flows
Notes Notes
Ratios Current Ratio
Quick evaluations of the economic health of a
company, from balance sheet or income Current Assets
Current Ratio = Current Liabilities
statement amounts
Return on =
Net Income
Stockholder’s Equity Stockholder Equity
Sales
Inventory turnover = Average Inventory
Price to Earnings
- Probably most familiar to stock investors