Taloudellisten raporttien elementit Flashcards
Beginning balance sheet and ending balance sheet
Beginning balance sheet is the same as the ending balance sheet of the previous fiscal year.
How do we go from beginning balance sheet to Ending balance sheet?
Beginning balance sheet
- Cash and Equity
VÄLISSÄ:
- Statement of Cash Flows = Net change in cash
- Statement of Shareholders’ Equity = Net change in Equity
- Income Statement = Net income
SAADAAN:
Ending Balance sheet
- Cash and Equity
Equity
BALANCE SHEET
Equity
= ((Cash + Other assets) / Total assets) - Liabilities
Net income
INCOME STATEMENT
Net income
= Revenues - Expenses
Net change in cash
STATEMENT OF CASH FLOWS
Net change in cash -> lisätään tai vähennetään: = cash from operations cash from investing cash from financing
Net change in Equity
STATEMENT OF SHAREHOLDERS’ EQUITY
Net change in Equity = \+ Investments by owners - Dividend \+ Earnings
Accrual accounting
Suoriteperusteinen kirjanpito
Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs. (NOT when payment is received or made.)
How Accrual accounting and Amount of cash generated from operations liittyvät toisiinsa?
Accrual accounting decouples measured earnings (net income) from the amount of cash generated from operations.
Accrual accounting revenues generally do not correspond to cash receipts for the period, nor do accrual expenses always correspond to cash outlays for the period.
DECOUPLES = separates eli irroittaa
Lue vaan
Accrual accounting can produce large discrepancies (eroavuus) between measured earnings and the amount of cash generated from operations.
Accrual earnings is a more accurate measure of the value creation during the period than is operating cash flow.
What Income statement reports?
Income statement reports the accumulation of costs and revenues during the fiscal year.
What Income statement contains?
- MUST contain as minimum information (IAS 1.82):
a) Revenues (Sales)
b) Finance costs
c) Share of the profit or loss of associates and joint ventures
d) Tax expense
e) Total of discontinuing operations - Statement of profit or loss and other comprehensive income
- Income attributable to controlling and non-controlling owners
Why do companies calculate and disclose non-IFRS numbers?
Siis IFRS numeroiden lisäksi.
In non-IFRS numbers the company makes adjustments to IFRS numbers. Companies use them because IFRS numbers are calculated under the GAAP (in this case under IFRS).
ESIMERKIKSI:
- IFRS: operating profit and operating margin
- non-IFRS: ADJUSTED operating profit and margin.
TRUE OR FALSE:
Adjusted Eli non-IFRS numbers are always bigger than IFRS numbers?
TRUE!
Adjusted (Eli non-IFRS) numbers are ALWAYS greater than the IFRS numbers.
Why do people criticise the use of non-IFRS numbers?
That is because non-IFRS numbers tend to make things look BETTER.
Non-IFRS numbers Eli
On sama asia kun:
Alternative performance measures TAI Adjusted numbers
Mitä tieto sanoo niiden Alternative performance measurien laskemisesta niiden vuosikertomuksessa?
Tieto presents certain financial measures, which, in accordance with the “Alternative Performance Measures” guidance issued by the European Securities and Markets Authority (ESMA), are not accounting measures defined or specified in IFRS and are, therefore, considered alternative performance measures. Tieto believes that alternative performance measures provide meaningful supplemental information to the financial measures presented in the consolidated financial statements prepared in accordance with IFRS and increase the understanding of the profitability of Tieto’s operations. Alternative performance measures are not accounting measures defined or specified in IFRS and, therefore, they are considered non-IFRS measures, which should not be viewed in isolation or as a substitute to the IFRS financial measures.
Adjusted operating profit (EBIT)
Operating profit + adjustments
Adjusted operating profit margin (EBIT), %
Adjusted operating profit (EBIT) / Net sales
Adjustments
Eli mitä lisätään/vähennetään, että päästään operating profit -> adjusted operating profit
Adjustments:
Operating profit (EBIT) \+ restructuring costs \+/- capital gains/losses \+ goodwill impairment charges \+ other items affecting comparability = Adjusted operating profit (EBIT)
Do we need balance sheet when calculating financial ratios?
Balance sheet is needed in almost all of the financial ratios.
When calculating financial ratios and doing financial analysis we typically combine information from the income statement and the balance sheet.
What information balance sheet helps to assess?
It helps in assessing the company’s
- rates of return (ROA, ROCE)
- Capital structure (Debt vs. Equity)
- Liquidity (cash conversion)
- Solvency (Ability to pay debt)
- Working capital (Efficiency)
What is Goodwill?
Goodwill is an intangible asset that accounts for the excess purchase price of another company.
Specifically, goodwill is the portion of the purchase price that is higher than the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process. The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and proprietary technology represent some reasons why goodwill exists.
Retained earnings
Retained earnings (RE) is the amount of net income left over for the business after it has paid out dividends to its shareholders.
The word “retained” captures the fact that because those earnings were not paid out to shareholders as dividends they were instead retained by the company. For this reason, retained earnings decrease when a company either loses money or pays dividends, and increase when new profits are created.
Balance sheet sides, what do they consist of?
Left (or up) we have the assets.
And on the right (or down) we have liabilities and equity.
What are the 3 types of cash flows we have in the statement of cash flows?
Cash flow from
- operating activities
- investing activities
- financing activities
Together these make up the change in cash and cash equivalents.
Sitten lisätään se viime vuoden lopun (eli tän vuoden alun) cash and cash equivalents, niin saadaan –> CASH AND CASH EQUIVALENTS that we see in the balance sheet.
Mitä tämä tilinpäätöksen päälaskelma kertoo:
Statement of the changes in equity
Statement of the changes in equity describes how equity and its component have changed during the fiscal year.
It is a nice summary that tells you why equity has changed. It is not used in financial statement analysis, like the other main statements.
Mistä johtuu changes in equity?
ajattele: Statement of the changes in equity
These changes occur for various reasons
- Earnings generated during the fiscal year
- Profit distribution (dividends)
- Purchases of own shares
- Option-based compensation
- Revaluation
