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    Entrep Computation

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    Emman Revilla
    The document discusses four key financial statements - the income statement, balance sheet, cash flow statement, and fund flow statement. It provides details on what each statement measures and how it is calculated. For example, it states that the income statement measures a company's revenues and expenses over a period of time, while the balance sheet summarizes a company's assets, liabilities, and equity at a point in time. It also discusses several financial ratios used to evaluate business performance, such as payback period, return on sales, and return on assets.

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    Entrep Computation

    Uploaded by

    Emman Revilla
    94 views18 pages
    The document discusses four key financial statements - the income statement, balance sheet, cash flow statement, and fund flow statement. It provides details on what each statement measures and how it is calculated. For example, it states that the income statement measures a company's revenues and expenses over a period of time, while the balance sheet summarizes a company's assets, liabilities, and equity at a point in time. It also discusses several financial ratios used to evaluate business performance, such as payback period, return on sales, and return on assets.

    Original Description:

    Income Statement, Balance Sheet and Financial Ratio and Measurements

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    The document discusses four key financial statements - the income statement, balance sheet, cash flow statement, and fund flow statement. It provides details on what each statement measures and how it is calculated. For example, it states that the income statement measures a company's revenues and expenses over a period of time, while the balance sheet summarizes a company's assets, liabilities, and equity at a point in time. It also discusses several financial ratios used to evaluate business performance, such as payback period, return on sales, and return on assets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    94 views18 pages

    Entrep Computation

    Uploaded by

    Emman Revilla
    The document discusses four key financial statements - the income statement, balance sheet, cash flow statement, and fund flow statement. It provides details on what each statement measures and how it is calculated. For example, it states that the income statement measures a company's revenues and expenses over a period of time, while the balance sheet summarizes a company's assets, liabilities, and equity at a point in time. It also discusses several financial ratios used to evaluate business performance, such as payback period, return on sales, and return on assets.

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    Financial Forecasts and Determination of

    Financial Profit
    Four Critical Financial Statements:
    1. Income Statement
    2. Balance Sheet
    3. Cash Flow Statement
    4. Fund Flow Statement
    Financial Forecasts and Determination of
    Financial Profit
    INCOME STATEMENT
    - is a financial statement that measures an enterprises
    performance in terms of revenue and expenses over a certain period.

    REVENUE – EXPENSES = NET INCOME or PROFIT


    (Loss)
    Financial Forecasts and Determination of
    Financial Profit
    INCOME STATEMENT
    Financial Forecasts and Determination of
    Financial Profit
    BALANCE SHEET
    - is a financial statement that summarizes a company's assets,
    liabilities and shareholders' equity at a specific point in time.

    • Assets – represent all the investments in the enterprise including the initial
    investments included in the pre-feasibility study.
    • Liabilities – represent the enterprises debts to suppliers, banks, governments,
    employees and other financiers.
    • Equity – aka Stockholders Equity, refers to investors investments in the
    stock/shares of the business.
    Financial Forecasts and Determination of
    Financial Profit
    BALANCE SHEET
    The balance sheet equation is:

    ASSETS = LIABILITIES + EQUITY


    Financial Forecasts and Determination of
    Financial Profit
    Financial Forecasts and Determination of
    Financial Profit
    The balance sheet provides an overview of company assets and debts.
    The income statement provides an overview of company revenues and
    expenses.

    Cash Flow Statement - records the amount of cash and cash


    equivalents entering and leaving a company. The CFS allows investors
    to understand how a company's operations are running, where its money
    is coming from, and how it is being spent.
    Financial Forecasts and Determination of
    Financial Profit
    Financial Ratios and Measurements
    PAYBACK PERIOD
    – how long it will take for the owner to get back what has been
    invested in the enterprise.

    PAYBACK PERIOD = TOTAL INVESTMENT/ ANNUAL NET


    INCOME AFTER TAXES
    Financial Ratios and Measurements
    PAYBACK PERIOD
    ABC Company's financial statements show a total investments of Php.
    1,500,000 and annual net income after taxes of Php.500,00. Compute
    for the enterprises income payback period.

    Payback Period = Total Investment / Annual Net Income After Taxes


    Payback Period = 1 500 000 / 500 000
    = 3 years
    Financial Ratios and Measurements
    PAYBACK PERIOD
    Assume company A invests $1 million in a project that will save the
    company $250,000 every year.
    Payback Period = Total Investment / Annual Net Income After Taxes
    Payback Period = 1 000 000 / 250 000
    = 4 years
    Financial Ratios and Measurements
    PAYBACK PERIOD
    The Delta company is planning to purchase a machine known as
    machine X. Machine X would cost $25,000 and would have a useful life
    of 10 years. The expected annual cash inflow of the machine is $10,000.
    Payback Period = Total Investment / Annual Net Income After Taxes
    Payback Period = 25 000 / 10 000
    = 2.5 years
    Financial Ratios and Measurements

    RETURN ON SALES (ROS)


    – ratio where the entrepreneur calculates how much profit the
    enterprise is earning for each peso sold.

    RETURN ON SALES = NET PROFIT AFTER TAXES / SALES


    Financial Ratios and Measurements

    RETURN ON SALES (ROS)


    ABC Company generates Php. 5,000,000 of sales annually with
    operating profit of Php. 500,000 before any taxes or interest. Calculate
    the ROS of the company.

    Return on Sales = Net Profit After Taxes / Sales


    = 500 000 / 5 000 000
    = .1 or 10%
    Financial Ratios and Measurements

    RETURN ON SALES (ROS)


    Assuming Jim’s Bowling Alley generates $500,000 of business each
    year and shows operating profit of $100,000 before any taxes or interest
    expenses, calculate the ROS of the enterprise.

    Return on Sales = Net Profit After Taxes / Sales


    = 100 000 / 500 000
    = .2 or 20%
    Financial Ratios and Measurements
    RETURN ON ASSETS (ROA) or
    RETURN ON INVESTMENTS (ROI)
    - measures the amount of return on an investment relative to the
    investment’s cost.

    ROA / ROI= NET PROFIT AFTER TAXES / TOTAL ASSESTS or


    INVESTMENT
    Financial Ratios and Measurements
    RETURN ON INVESTMENTS (ROI)
    ABC Company's financial statements show a total investments of Php.
    1,500,000 and annual net income after taxes of Php.500,00. Compute
    for the return on investments.

    ROI = NET PROFIT AFTER TAXES / TOTAL ASSESTS or INVESTMENT


    = 500 000 / 1 500 000
    = .33 or 33%

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