Financial- Net Income Statement - P&L Part 2 Flashcards
What is P&L (Profit and Lose) or NIS (Net income statement?
Discusses flow of past events and how much the company earned in the period.
Tell us how well a company is performing over a period of time (monthly/quarterly/yearly)
The difference in revenue and expenses is net income or loss
- This amount is transferred to the Equity section of the balance sheet
- Net income increases the owner’s equity or the owner’s stake in the company
Formula: Revenue – Expenses = Net Income
What is Balance Sheet?
Gives a picture of the company’s financial position at a given date and represents how much the company is worth. List of all assets. Assets = Liabilities + Owner’s (Stockholder’s) Equity
Tell us how efficiently a company is utilizing its assets, and how well it is managing its liabilities in pursuit of profits.
Difference between Balance Sheet and P&L.
P&L how much the company earned in certain period can be 1 month, 1st quarter, yearly while Balance sheet tells us how much the company cost, it is the list of the value of all our assets, a picture of the financial position.
Difference between Product, Service Revenue and Reimbursable Revenue
Product revenue is all charges for sand/chemicals,
Services revenue charges for pumping.
Reimbursable Revenue This is when client ask us to provide an additional service like fuel, shower trailer.
Difference relationship between Revenue and expenses.
Revenue is how much I am earning after I sell services and products, Expenses is how much I am spending to generate that revenue (cost). Revenue – Expenses = Net Income
Difference between Direct Field costs and Shared costs.
Direct field cost it is all the expenses generated to create revenue for the segment at a location, Local management has control of this while Shared cost is all the costs that we have in common to different location like Intouch, SInet, CSL research of new products, local management do not have control of this.
Explain depreciation
The cost of an asset taken over useful life using the straight line method.
Straight line method means the asset cost is equally distributed amongst the entire life.
Example, a pump that cost 1.2M has useful for 10 years, it will have a monthly depreciation of 10K by month.
(1.2M/120months(10 years))= 10K month
What is FTE?
FTE: Field Technical Equipment
Pumps/PODS, all assets that generate revenue
What is NFTE?
NFTE: Non-Field Technical Equipment
Bases, forklift, all assets that do not generate revenue
Explain Compensation
Cost associated with keeping employees paid. Includes all payroll cost and benefits in respect of personnel. We have 2 types of compensation Fixed and Variable.
Fixed: base Salary, benefits, incentives, allowances. (Won’t over time always the same)
Variable: Overtime, Job bonus, day rate (will change over time, it is not the same every paycheck)
What are the categories of compensations?
- International Mobile
- International Commuter
- Career Mobile (Euromobile/Geomobile etc)
- Home Country
- HCRE (Home Country Resident, Exempt)
- HCRNE (Home Country Resident, Non-Exempt)
- HCM (Home Country, Mobile)
- Contractors (purely the invoice cost from 3rd party)
Explain M&S
Material and Supplies.
All M&S items are fully expensed when received at location.
Two categories: Fuel and non-fuel
- Spare Parts
- Fuel & Lubricants
- Maintenance and certification costs of tools and equipment
- Repairs and maintenance
- Miscellaneous repairs
Examples: Coflex hose, tools, annual inspections, autos lights, fracturing equipment, drilling tools, lube oils.
What are the top 4 SLB expenses?
Depreciation, Compensation, M&S and transportation and mobilization.
Cost saving ideas/initiatives, How would you react to a business down turn / up upturn?
Be able to analyze where we can reduce expenses, (depreciation, M&S, compensations) like loan out people, equipment to areas that activity is higher. Control employee’s hours, Furlough people if necessary. Make crew moving equipment, finding less expensive suppliers, controlling better the PPE, reduce it to the minimum, do not giving the crews all time excess of PEE making them taking care of it. If we don’t need it don’t buy it
M&S vs. Inventory on the P&L
M&S are all parts room items, are full expensed when we received at location.
Inventory are all BP items- inventoried on the balance sheet until we used or sold on a job, then the cost is expensed on the P&L as product cost.
Example; Smoothie: Inventory all the fruit, milk, sugar and ice. M&S will be glasses, strolls, and blender.
