Accounting Analysis James Godrich 22/11/2018

What Will I Learn? Income Statement Balance Sheet Cash Flow Statement Naughties

Gross Profit Cost of Goods Sold: ‘is the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the good along with the direct labour costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs.’ Source: Investopedia

Operating Profit Selling, General & Administrative Expense: ‘is reported on the income statement as the sum of all direct and indirect selling expenses and all general and administrative expenses (G&A) of a company. It includes all the costs not directly tied to making a product or performing a service.’ Source: Investopedia

Net Income

Income Statement

Balance Sheet

Balance Sheet Current Assets Non Current Assets = Current Liabilities Non Current Liabilities + Share Capital Retained Earnings

Balance Sheet

Cash Flow Statement CFO – cash flow from day-to-day operations CFI – cash flow from investment or disposal in assets CFF – cash flow from company financing

Cash Flow Statement

What do we like?

And how do we measure it? FCFF = CFO + Int(1-tax rate) - Capex

Berendsen

Naughties Off BS Gearing (pension & leases) – are they hiding debt where I might not normally look? Working Capital movements – is there any reason to be suspicious about WC? Capex – has the asset base been underinvested? Exceptionals – are exceptionals truly exceptional?