1 / 31

# Financial analysis & statements - PowerPoint PPT Presentation

Financial analysis & statements. Financial Analysis. Methods to monitor the fiscal status of the organization over a period of time Monthly, quarterly, annually Methods Break even analysis Income statements Cash flow statement Balance sheet Budget statement. Break Even Analysis.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

## PowerPoint Slideshow about 'Financial analysis & statements' - maire

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

• Methods to monitor the fiscal status of the organization over a period of time

• Monthly, quarterly, annually

• Methods

• Break even analysis

• Income statements

• Cash flow statement

• Balance sheet

• Budget statement

• How many units of a product must be sold in order to cover all costs of production of that unit

Variable

• Costs that remain steady regardless of volume

• Maintenance

• Salaried staff

• Mortgage

• Costs that change in proportion to a change in volume

• Supplies

• T-shirts

Costs

• Method #1

• BE=F+(V*Units sold)/Units sold

• BE=break even

• F= fixed costs

• V= variable costs

Break Even – Climbing Tourney Eg

Break Even – Climbing Tourney Eg

Break Even – Climbing Tourney Eg

### Break Even

Method #2

• How many units of a product must be sold in order to cover all costs of production of that unit

• Formula

• BE=F / (P – V)

• BE= Break even point

• F = Fixed costs

• P = Selling price per unit

• V = Variable costs per unit

• BE=F / (P – V)

• F=\$2650

• V=\$7

• P=\$60

• BE=2650 / (60-7)

• BE=2650 / 53

• BE=50 people

Total revenue = 50*\$60=\$3000

• Fixed costs = \$8000

• Variable costs = \$10/person

• Bike rental = \$50/bike

• BE=F / (P – V)

• BE=8000/(50-10)

• BE=8000/40

• BE=200 bikes

• Profit

• \$40 profit per bike over 200

• 250 bikes: 50*\$40=\$2,000

• 350 bikes: 150*\$40=\$6,000

• Loss – 150 bikes

• Expenditures (total fixed & variable costs)

• 8000+(\$10*150)=\$9,500

• Revenues

• \$50*150 bikes=\$7,500

Fixed

Variable

\$2,000 loss

Loss – lower than BE

BE= 2650/(100-7)

BE=29 units

Loss – lower than BE

Expenditures:

\$2650 (fixed)

\$140 (variable cost per unit..20*\$7)

\$2790

Revenues:

\$2000 (20 people * \$100)

Loss: -\$790

Profit – higher than BE

Revenue: (40)

\$100-\$7/person over BE (29)

\$93 * (40-29)

Profit: \$1023

Revenue: (60)

\$100-\$7/person over BE (29)

\$93 * (60-29)

Profit: \$2883

Usually monthly, quarterly & annually

Clear Water Rafting Company

Income Statement as of July 1- 31, 2011

• Starting a new company:

• 1st year prepare monthly projections

• Years 2-3 Quarterly projections

• Years 4-5: Annually

• Financial condition of a business at a single point in time

• End of month, quarter, year

• Provides information about a company’s assets, liabilities, and owner’s equity (capital)…owes vs. owns

• Terms…

• Current assets

• Cash & assets that can be turned to cash quickly (within a year)

• Inventory

• Bank deposits

• Accounts receivable

• Amts not yet collected from customers but are due

• Fixed assets

• Used to produce goods & aren’t for sale

• Land, building, machinery, equipment

• Current liabilities

• Debts for regular business operations that will come due within a year

• Accounts payable

• What is owed to suppliers for things bought on credit

• Salaries

• Long term liabilities

• Due after a year

• Mortgages, bonds, large loans

• Equity (owners net worth)

• Portion of business owned free and clear of all debts

• Assets = liabilities + equity or

• Equity = assets – liabilities

Balance Sheet as of December 31, 2007

AKA: Net worth

Adjust equity to make it “balance” to reflect the remaining value “owed” to the owners

• Expended monies

• Allocated monies

• % of allocated \$\$ that is committed

• Income statement provided information about revenues coming in and expenses going out, but not cash in and cash out

• What’s already in the bank

• Negative cash flows okay, but not sustainable forever

Matches income statement figures

Clear Water Rafting Company

Cash Flow Statement - 1st & 2nd Quarters

* Note that the numbers in parenthesis indicate a negative balance

In the bank

Matches income statement figures

Clear Water Rafting Company

Cash Flow Statement - 1st & 2nd Quarters

* Note that the numbers in parenthesis indicate a negative balance

In the bank

First month to exceed savings at start of fiscal year

Clear Water Rafting Company

Cash Flow Statement - 1st & 2nd Quarters

* Note that the numbers in parenthesis indicate a negative balance

Positive cash flow

In the bank