FINANCIAL STATEMENT ANALYSIS BALANCE SHEET (The Statement of Financial Position-IAS 1)

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) International Accounting Standard 1 Presentation of Financial Statements (IAS 1) The objective of this Standard is to prescribe the basis for presentation of financial position of reporting entity. Standard does not prescribe the order or format in which an entity presents items. An entity makes the judgment about whether to present additional items separately on the basis of followings: the nature and liquidity of assets; the function of assets within the entity; and the amounts, nature and timing of liabilities.

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) As a minimum, the statement of financial position shall include following items: cash and cash equivalents trade and other receivables inventories financial assets property, plant and equipment; intangible assets; investment property investments accounted for using the equity method; biological assets the total of assets classified as held for sale and assets assets held for sale and discontinued operations financial liabilities trade and other payables liabilities and assets for current tax deferred tax liabilities and deferred tax assets, provisions liabilities included in disposal groups classified as held for sale non-controlling interests, presented within equity and issued capital and reserves

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) PRESENTATION OF ASSETS AND LIABILITIES Reporting According to Liquidity: If a presentation based on liquidity provides information that is reliable and more relevant an entity shall present all assets and liabilities in order of liquidity. Current/Non-Current Distinction: An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position. When an entity supplies goods or services within a clearly identifiable operating cycle, separate classification of current and non-current assets and liabilities provides useful information.

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) Assets Balance Sheet Liabilities I. Current Assets III. Current Liabilities Cash and Cash Equivalents) Financial Liabilities (loans and issued bonds) Financial Assets Trade and Other Payables Trade and Other Receivables Current Tax Payables Inventories Provisions Biological Assets Other Current Assets Assets Held For Sale II. Non-Current Assets IV. Non-Current Liabilities Investments Accounted For Using The Equity Method Financial Liabilities (long-term loans and issued bonds) Property, Plant And Equipment Deferred Tax Liabilities (Ertelenen Vergi Yükümlülükleri) Intangible Assets Deferred Tax Assets (Ertelenen Vergi Varlıkları) V. Equity Assets Held For Sale and Discontinued Operations Issued Capital and Reserves Other Non-current Assets Current – Non Current Assets An entity shall classify an asset as current when: cash or a cash equivalent financial assets (marketable securities) trade receivables inventories, biological assets other current assets (it expects to realize the asset within twelve months after the reporting period) An entity shall classify all other assets as non- current.

Current – Non Current Liabilities Assets Balance Sheet Liabilities I. Current Assets III. Current Liabilities Cash and Cash Equivalents) Financial Liabilities (loans and issued bonds) Financial Assets Trade and Other Payables Trade and Other Receivables Current Tax Payables Inventories Provisions Biological Assets Other Current Assets Assets Held For Sale II. Non-Current Assets IV. Non-Current Liabilities Investments Accounted For Using The Equity Method Financial Liabilities (long-term loans and issued bonds) Property, Plant And Equipment Deferred Tax Liabilities (Ertelenen Vergi Yükümlülükleri) Intangible Assets Deferred Tax Assets (Ertelenen Vergi Varlıkları) V. Equity Assets Held For Sale and Discontinued Operations Issued Capital and Reserves Other Non-current Assets Current – Non Current Liabilities Some current liabilities, such as trade payables and accruals for employee and operating costs, are part of the working capital. For this reason, trade payables, even if the maturity of longer than 12 months will not classified as non-current liabilities.

Comparison of Current/Non-Current Distinction IAS 1 Uniform Accounting System I. Current Assets Cash and Cash Equivalents (Cash and Cash at Banks) Monetary Assets Financial Assets (Hold for sale in 12 moths or operating cycle) Marketable Securities Trade and Other Receivables Trade and Other Receivables Inventories Biological Assets Other Current Assets (Prepayments and Accrued Income and Other Current Assets) Long-Term Construction Contract Costs Prepayments and Accrued Income Assets Held For Sale

Comparison of Current/Non-Current Distinction IAS 1 Uniform Accounting System II. Non-Current Assets Trade and Other Receivables Investments Accounted For Using The Equity Method Financial Non-Current Assets Property, Plant And Equipment Tangible Assets Intangible Assets Deferred Tax Assets Deferred Tax Liabilities Assets Held For Sale and Discontinued Operations Depletable Assets Other Non-Current Assets (Prepayments and Accrued Income and other non-current assets) Prepayments and Accrued Income

Comparison of Current/Non-Current Distinction IAS 1 Uniform Accounting System III. Current Liabilities Financial Liabilities (Loans And Issued Bonds) Loans Trade and Other Payables Trade Payables and Other Payables Current Tax Payables Taxes and Social Security Charges Payables Provisions Provisions for Liabilities and Charges Other Liabilities (Differed Income and Expense Accruals and Other Non-current Liabilities) Advances Received Long-Term Construction Contract Revenues Deferred Income and Expense Accruals IV. Non-Current Liabilities IV. Non-current Liabilities Financial Liabilities (long-term loans and issued bonds) Deferred Tax Liabilities Other Liabilities (Defered Income and Expense Accruals and other non-current liabilities) Other Non-Current Liabilities V. Equity Issued Capital and Reserves Paid-in Capital Capital Reserves Profit Reserves Retained Earnings (Profits of Previous Periods Retained losses (Loses of Previous Periods) Net Profit/Loss of Current Period

Comparison of Current/Non-Current Distinction IAS 1 Uniform Accounting System III. Current Liabilities Financial Liabilities (Loans And Issued Bonds) Loans Trade and Other Payables Trade Payables and Other Payables Current Tax Payables Taxes and Social Security Charges Payables Provisions Provisions for Liabilities and Charges Other Liabilities (Differed Income and Expense Accruals and Other Non-current Liabilities) Advances Received Long-Term Construction Contract Revenues Deferred Income and Expense Accruals IV. Non-Current Liabilities IV. Non-current Liabilities Financial Liabilities (long-term loans and issued bonds) Deferred Tax Liabilities Other Liabilities (Defered Income and Expense Accruals and other non-current liabilities) Other Non-Current Liabilities V. Equity Issued Capital and Reserves Paid-in Capital Capital Reserves Profit Reserves Retained Earnings (Profits of Previous Periods Retained losses (Loses of Previous Periods) Net Profit/Loss of Current Period

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) INFORMATION TO BE PRESENTED EITHER IN THE STATEMENT OF FINANCIAL POSITION OR IN THE NOTES An entity shall disclose, either in the statement of financial position or in the notes, further sub- classifications of the line items presented, classified in a manner appropriate to the entity’s operations.

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position)

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position)

FINANCIAL STATEMENTS Balance Sheet (Statement of Financial Position) SUMMARY According to IAS 1, while the main asset and liability items are being reported on the face of balance sheet, the detailed information is presented in notes. On the other hand, according to Uniform Accounting System, the main asset and liability groups and the details are both reported on the face of balance sheet. In addition, the measurement and evaluating methods are presented in balance sheet notes.

FINANCIAL STATEMENT ANALYSIS Example 1: Prepare the balance sheet which is suitable for financial analysis by using the items listed below: TL Cash and Cash Equivalents 7.000 Income Accruals 2.000 Marketable Securities 3.000 Taxes Payable 5.000 Short-term Loans 11.000 Goodwill 6.000 Issued Bonds 10.000 Prepaid Expenses Trade Payables 15.000 Net Profit/Loss of The Period Trade Receivables 8.000 Receivables From Shareholders 1.000 Finished Goods 20.000 Investments in Subsidaries Raw Materials Work-in Process Property, Plant and Equipment 60.000 Expense Accruals Retained Earnings (profit reserves) Revaluation Reserves For Fixed Assets (capital reserves) Long-term loans 30.000 Receivables from Subsidaries Accumulated Depreciation Paid-in Capital ? Advance Received

ABC Co. 31.12.2010 Balance Sheet Current Assets 55.000 Current Liabilities 39.000 Cash and Cash Equivalents 7.000 Short-term Loans 11.000 Marketable Securities 3.000 Trade Payables 15.000 Trade Receivables 8.000 Advance Received 5.000 Other Receivables Taxes Payable - Receivables From Shareholders 1.000 Expense Accruals - Receivables from Subsidiaries 2.000 Non-Current Liabilities 40.000 Inventories 30.000 Issued Bonds 10.000 - Raw Materials Long-term loans - Work-in Process Equity 47.000 - Finished Goods 20.000 Paid-in Capital 35.000 Prepaid Exp. and Income Acc. 4.000 Capital Reserves - Income Accruals - Revaluation Reserves for Fixed Assets - Prepaid Expenses Profit Reserves Non-Current Assets 71.000 - Retained Earnings Investments in Subsidiaries Net Profit/Loss of The Period Property, Plant and Equipment 60.000 Accumulated Depreciation (15.000) Goodwill 6.000 TOTAL ASSETS 126.000 TOTAL LIABILITIES AND EQUITY

FINANCIAL STATEMENT ANALYSIS Example 2: Prepare the balance sheet according to IAS 1 by using the items listed below:   TL Cash and Cash Equivalents 2.000 Other Current Assets Financial Assets 2.500 Deferred Tax Liabilities 5.000 Short-term Loans 10.000 Goodwill 6.000 Issued Bonds (long term) Provision for Taxes Trade Payables 15.000 Net Profit/Loss of The Period ? Trade Receivables Investments in Subsidaries Finished Goods Revaluation Funds (Capital Reserves) Raw Materials Paid-in Capital 30.000 Property, Plant and Equipment 50.000 Long-term loans 20.000 Retained Earnings Accumulated Depreciation Other Current Liabilities