The cash flow statement summaries the cash received and paid out
during a period of time which, as in the case of an income statement, is
usually a month or a year. As many of the items in an income statement
are paid for in cash, the cash flow statement could just repeat the same
information. To simplify the detail, the cash flow statement starts with
the operating income that has been earned and then adjusts for non-cash
items and movements in working capital. As a ..read more
The income or profit and loss statement provides a summary of the
revenue earned and the costs incurred over a period of time which is
usually a month or a year. The statement starts with the trading activities,
covering the revenue and direct costs incurred in earning that revenue.
These are followed by the indirect or overhead costs to derive the
operating income:
Revenue $100
Direct costs ($60) Costs incurred in providing products or services
such as raw materials and packaging
Gross profit $40 Also known as trading profit
Indirect ..read more
All businesses need a system of recording transactions and of presenting
them in a coherent way which is widely understandable. The fundamental
business model, introduced in Chapter 2 and reproduced here as
Figure 4.1, shows the fl ow of transactions round the business.
The underlying transactions can be grouped into four categories as set
out in Table 4.1. The two columns split transactions according to whether
they involve money coming into the business or money going out of the
business. The two rows are split according to ..read more
Financial results can be presented in a bare way that many may fi nd diffi cult to interpret usefully. Alternatively, they can be presented with an engaging analysis that is supported by pictorial or graphical charts to convey important information. In his book A Primer in Data Reduction (Wiley, 1982), A.S.C. Ehrenberg describes several methods for communicating data through tables and charts that make it easier to read, assimilate and act upon. Some of his techniques include: Rounding Most people cannot manipulate long numbers in their heads, so ..read more
In many organisations the finance department is the fount of all financial knowledge. Reports are regularly produced, often referred to anonymously as, for example, the “Blue Book”. They are published on a set day, such as six working days after the month end, and crafted by analysts who toil with their spreadsheet “front ends” to drill down into the database. These reports are often based on standard templates that have been used for several years, are only ever added to and are rarely thinned out. This is ..read more
The directors of a company have a legal responsibility for ensuring that the company keeps appropriate accounting records which enable them to report the fi nancial position of the business to investors, regulators and tax authorities. This responsibility is normally delegated to the fi nance director. Until recently the fi nance director would be in charge of the “accounts department”, often a large team of people whose primary role was bookkeeping. They manually recorded every transaction in ledgers for purchases, sales, cash and a host of other details. Today ..read more
For a business to be successful it needs to develop a revenue stream by providing a product or service that customers will buy. The criteria for this customer proposition are to: _ have a product or service that meets a specifi c need for a customer such that they will want to buy it; _ provide the product or service better than a competitor so the business will be chosen in preference to others; _ charge a price that offers value to the customer yet enables the business ..read more
Although the defi nition of success given above may be at the heart of
a business, many companies prefer a softer approach to defi ning what
they are in business to achieve. For example, Microsoft (a software giant)
states that its mission is: “To enable people and businesses throughout
the world to realize their full potential. We work to achieve our mission
through technology that transforms the way people work, play, and
communicate.”
There is no mention of the investors here. Among the exceptions are:
_ ExxonMobil, an ..read more
To defi ne a successful business it is necessary to begin by understanding what a business is – in essence “a commercial operation that is run with the aim of making a profi t”. This poses two questions: what is a commercial operation and what is profi t? A commercial operation is an activity that is conducted for the benefi t of its owners. The signifi cant part is “for the benefi t of its owners”, which differentiates it from a government organisation or a charity ..read more
To be able to truly correctly employ home based discussion board advertising solution it’s best to manage it respectfully, have persistence and show dedication. On my personal study on e-commerce increasing visitor count professionals, My wife and I reached understand that their excitement to find different internet marketing tactics and coupled track of effort, has definitely being their secret in order to web marketing benefits. Its within the exact same research that I unearthed an excellent location to discussion board ..read more
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