1️⃣
Balance sheet, P&L, EBITDA,
EBIT, EBT, ROTA, ROS, ROE
It is important to know the numbers:
Question asked by internal users
finance uses: Is cash sufficient to pay the dividends to microsoft
stakeholders?
marketing uses: what price should apple charge to maximize the revenue
human resources: can general motors afford to give its employees pay raises
this year?
management: which Pepsi line is the most profitable? should any pepsi line be
eliminated?
Question asked by external users
investors: How does Disney compare in size and profitability with Time
Warner?
creditors: Will united states be able to pay its debts as they come due?
Post Enron
Investors lost confidence in corporate accounting because of unethical financial
reporting
In 2022 the US Congress passed the Sarbanes-Oxley act to improve the
trustworthiness of financial reporting by:
Requiring CEOs and CFOs to certify the accuracy of financial reports
personally
Required companies to establish robust internal controls over financial
reporting (which are to be regularly assessed and audited)
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 1
, Executive can no longer claim ignorance about financial misstatements
prohibiting auditors from providing certain non-audit services to clients,
reducing conflicts of interest
Imposing more severe punishments for fraudulent financial activities
2 Important documents
Profitability: An indicator of a firm’s ability to cover negative components
(including loan and equity capital) with positive components of income at
market conditions without systematically getting support from third parties.
When we want to check the profitability of a company we have to see the
profit and loss account.
Solvency: A firms ability to cover a debt at any given moment, when we want
to see if a company is solven or not we have to consider at the balance sheet.
Balance sheet
A snapshot of the company’s financial position at a specific point in time; it
consider three main components:
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 2
, Profit and loss account
P&L: Measures the profits or losses resulting from both regular and extraordinary
business activities within a specific timeframe.
In that document are reported all the performances of that year and also of the
previous year, to analyze how the company is going
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 3
, Apple’s P&L
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 4
Balance sheet, P&L, EBITDA,
EBIT, EBT, ROTA, ROS, ROE
It is important to know the numbers:
Question asked by internal users
finance uses: Is cash sufficient to pay the dividends to microsoft
stakeholders?
marketing uses: what price should apple charge to maximize the revenue
human resources: can general motors afford to give its employees pay raises
this year?
management: which Pepsi line is the most profitable? should any pepsi line be
eliminated?
Question asked by external users
investors: How does Disney compare in size and profitability with Time
Warner?
creditors: Will united states be able to pay its debts as they come due?
Post Enron
Investors lost confidence in corporate accounting because of unethical financial
reporting
In 2022 the US Congress passed the Sarbanes-Oxley act to improve the
trustworthiness of financial reporting by:
Requiring CEOs and CFOs to certify the accuracy of financial reports
personally
Required companies to establish robust internal controls over financial
reporting (which are to be regularly assessed and audited)
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 1
, Executive can no longer claim ignorance about financial misstatements
prohibiting auditors from providing certain non-audit services to clients,
reducing conflicts of interest
Imposing more severe punishments for fraudulent financial activities
2 Important documents
Profitability: An indicator of a firm’s ability to cover negative components
(including loan and equity capital) with positive components of income at
market conditions without systematically getting support from third parties.
When we want to check the profitability of a company we have to see the
profit and loss account.
Solvency: A firms ability to cover a debt at any given moment, when we want
to see if a company is solven or not we have to consider at the balance sheet.
Balance sheet
A snapshot of the company’s financial position at a specific point in time; it
consider three main components:
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 2
, Profit and loss account
P&L: Measures the profits or losses resulting from both regular and extraordinary
business activities within a specific timeframe.
In that document are reported all the performances of that year and also of the
previous year, to analyze how the company is going
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 3
, Apple’s P&L
Balance sheet, P&L, EBITDA, EBIT, EBT, ROTA, ROS, ROE 4
