Understanding Financial Statements in English not Finance Speak
- Slides: 17
Understanding Financial Statements (in English, not Finance Speak) Thomas A. Mc. Laughlin tamclaughlin@comcast. net www. tamclaughlin. net 617. 549. 9611 tamclaughlin@comcast. net
Key Principles • Entity • Money measurement • Conservatism • Dual aspect • Going concern www. tamclaughlin. net tamclaughlin@comcast. net
Key Principles • Cost concept • Materiality • Realization • Matching www. tamclaughlin. net tamclaughlin@comcast. net
Other Important Concepts • • Accrual vs. cash basis of accounting Fund accounting GAAP FASB www. tamclaughlin. net tamclaughlin@comcast. net
Yellow and Red Flags CAUTION www. tamclaughlin. net STOP! tamclaughlin@comcast. net
www. tamclaughlin. net tamclaughlin@comcast. net
The Three Levels of Reporting Compilation Review Audit Low High Complexity Time Required Assurance www. tamclaughlin. net tamclaughlin@comcast. net
The Audit Equation Auditing Auditor Management Bookkeeping www. tamclaughlin. net tamclaughlin@comcast. net
The Truth is in the Footnotes • Accrual basis of accounting • Related party transaction • Borrowing practices -- key areas: • purpose of borrowing • status of lines of credit • interest rate charged www. tamclaughlin. net tamclaughlin@comcast. net
The Truth is in the Footnotes (cont. ) • Lawsuits pending, if any • Extraordinary transactions • Pending adjustments • Comments about uncertainty of government funding, etc. • Subsequent events www. tamclaughlin. net tamclaughlin@comcast. net
Current Ratio: Current assets Current liabilities How capable is this organization of meeting its obligations in the short term? To what degree does the organization have enough short term assets to meet its immediate obligations? www. tamclaughlin. net tamclaughlin@comcast. net
Days’ Cash: Cash & equivalents * 365 Operating Expenses - Depreciation If a nonprofit suddenly has to live off its cash accounts only -- no more cash is coming in -how long will it survive if it continued spending at its usual rate? www. tamclaughlin. net tamclaughlin@comcast. net
Days’ Receivables Accounts receivable * 365 Operating Revenue For organizations that provide services for a fee or hold government contracts, how long does it take, on average for you to be paid? www. tamclaughlin. net tamclaughlin@comcast. net
Debt to Net Assets Long-term Debt Net Assets Compares the total amount of long term debt to the total net assets (“net worth”) of the organization to see how much of the latter could potentially be claimed by outside lenders. www. tamclaughlin. net tamclaughlin@comcast. net
Accounting Age (of Property and Equipment) Accumulated Depreciation Expense On average, how well does this organization keep up its investment in tangible assets like computers, buildings, vehicles, etc. www. tamclaughlin. net tamclaughlin@comcast. net
Profitability Revenue - Expenses Revenue The “bottom line. ” www. tamclaughlin. net tamclaughlin@comcast. net
Sunset, Plum Cove Cape Ann 17
Think in english speak in english
Bella said i speak english
To speak without preparation
Sudden and violent but brief; fitful; intermittent
Othello poetry vs prose
Stevie smith i do not speak
Past continuous
What is the theme of no speak english
Let's speak english
Keep calm and speak english
Do you speak english yes i do
Please speak english in class
Because you speak english unnaturally
He can speak english
It's time to speak
Frankovia
Mind your pronunciation
Language in english
