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Financial Statements
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FINANCIAL STATEMENTSThe simplified version
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The financial statements
Balance Sheet
Cash + other Assets = Total
Assets
Liabilities (Debt)Shareholder’s
Equity
Cash Flow Statement
Cash from:
OperationsInvestingFinancing
Income Statement
Revenue – Expenses = Net
Income
Balance Sheet
Cash + other Assets = Total
Assets
Liabilities (Debt)Shareholder’s
Equity
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Income Statement
Profits from operating the business
Not necessarily cash flow, but usually close
Doesn’t have: Cash flow, cash balance!
Revenue 100
- COGS 50
Gross Profit
50
- Overhead Costs
20
EBITDA 30
- Interest 1
- Tax 10
- Depreciation
1
Net Income 18
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Income Statement ex: Google
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Balance Sheet
Assets = Liabilities + Equity
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The balance sheet, simplified
Assets = Property owned by the company, including cash
Liabilities = Debt, short-term and long-termEquity = Investment in shares of the company
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Cash Flow Statement
Links the balance sheets
New cash from investment is shown on the cash flow statements
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Timing
The balance sheet is a snapshot at a single point in time
The income and cash flow statement explain changes between balance sheets
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Exercise
Look at the financial statements for the following companies in different industries:
FacebookGeneral ElectricFordBPMicrosoft
Then, fill out the table on the following slide.
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Financial statements exercise
FB GE Ford BP MSFT
Revenue ($) 86.8
COGS26.9
(31%)
Gross Profit59.9
(69%)
Overhead Costs (SG&A + R&D)
32 (36.8%)
Cash & ST Investments 85.7
Long term debt 20
Calculate the following totals for the most recent last 12 months.
Also, divide by revenue to calculate a percent ratio.
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Financial statements exercise
• What did you notice?• Why do you think these companies
varied?