Understanding Financials Statements Basic Financial Statements q Profit
Understanding Financials Statements
Basic Financial Statements q Profit & loss q Balance Sheet q Cashflow
Profit & Loss Details the Revenue and Expenditure of a Business
Revenue or Income Components of a Profit & loss Statement Cost of Good Sold or Costs of Sales Gross Profit Operating Expenses Net Operating Profit
How we Generate Income Revenue
Directly related to Revenue Cost of Goods Sold Property or Urgent Repairs & Maintenance Cost of Sales Council Rates & Water Rates Products Services
Gross Less Profit What’s left over to run the business
Phone & Internet Accounting Operating Electricity & Gas Office Supplies Charges Expenses Computers & IT Wages General Cost of Running a Business
Gross Profit Operating Profit Less Operating Expenses Running the Business = Profit After Running the Business
Revenue Rental income $300, 000 Grants $10, 000 Subsidies $15, 000 Total Revenue $325, 000 Cost of Goods Profit & loss Property insurance $20, 000 Council rates $30, 000 Water rates $20, 000 Responsive R&M Total Cost of Goods Gross Profit $150, 000 $220, 000 $105, 000 Operating Expenses Accounting Statement $20, 000 Bank charges $4, 000 Consultancy fees $1, 000 IT expenses $1, 200 Electricity/gas $1, 200 Office & postage expenses $1, 100 Wages & on-costs $65, 000 General insurance $600 Subscriptions $100 Phone/fax/internet Total Operating Expenses Net profit (EBITDA) $1, 200 $95, 400 $9, 600
Balance Sheet A snapshot of a business as of a particular date It lists all of your assets and liabilities and gives you a net asset position.
Current Assets Non-Current Assets Components of a Balance Sheet What we own Total Assets Current Liabilities Non-Current Liabilities What we owe Total liabilities Net Asset Position What the business is worth
Cash Current Assets Short-Term Investments Assets I have access to within the next 12 Months
Non-Current Assets Land & Properties Long-Term Investments Vehicles Office Items – Plant & Equipment Long-Term
Accounts Payable Current Liabilities GST, Superannuation, Business Tax Short-Term Loans Liabilities Payable Within the Next 12 months
Holiday Leave Non-Current Planned Repair & Maintenance Liabilities Long Service Leave Sick leave Long-Term Loans Long-Term Liabilities of the Business
Net Asset Cash Land & Properties Investments Less Position BAS, Employee Benefits Repair & Maintenance Loans Value of the Business
Balance Sheet Current Assets Cash at Bank Short-Term Investments Receivables (Debtors) Total Current Assets $85, 000 $100, 000 $18, 227 $203, 227 Non-Current Assets Land & Properties Office Items Vehicles Long-Term Investments Total Non-Current Assets $5, 000 $25, 000 $12, 500 $120, 000 $5, 157, 500 Total Assets $5, 360, 727 Current Liabilities Payables (Creditors) Short-Term Planned R&M Provisions Tax Provisions Total Current Liabilities $3, 673 $150, 000 $6, 500 $160, 173 Non-Current Liabilities Long-Term Planned R&M Provisions Other Provisions Total Non-Current Liabilities $250, 000 $7, 500 $257, 500 Total liabilities $417, 673 Net Assets $4, 943, 054
Cashflow Money Coming in and Money Going Out Of the Business
That’s a quick Guide to Understanding Financials Statements
This short video is to be used as a guide only. SSBS always recommend you consult with your accountant for detailed information relating to your particular financial statements
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