20140113 finance workshop_module1_basicconcepts_part4
TRANSCRIPT
There are 2 types of financial reporting
1. Project profitability
2. Product line profitability
3. Customer profitability
4. Business Unit P&L
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RegulatoryReporting
1. Income Statement or Profit & Loss (P&L)
2. Balance Sheet
3. Cash flow statement
ManagementReporting
External audiencePrepared in collaboration with
accountant
Internal audienceFull freedom in what you do &
how you do it
Management reporting is mainly for internal use Management reporting is used to support decision-making
Define strategic Priorities Allocate resources Determine pricing and cost initiatives Evaluate real performance by de-averaging Reward teams (i.e. performance management)
Uses similar data than regulatory reporting but shows more detail and can be split in different units of choice, e.g. Project profitability Product line profitability Customer profitability Business Unit P&L
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What do we mean with de-averaging (1/2)?
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What do we mean with de-averaging (2/2)?
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Key take-aways of this module
As an entrepreneur, it is important to understand financial statements To plan & budget your business To manage teams & resources To negotiate with customers & suppliers To negotiate with banks and shareholders
Two types of financial reporting exist Regulatory reporting for an external audience Management reporting for internal decision making
There can be important differences between the result in the P&L and the cash flow statement Cash planning is crucial for all companies, but especially for
start-ups
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End of this module
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