1. Financial Reports EGN 5622 Enterprise Systems Integration Spring, 2013

2. Financial Reports Concepts & Theories

3. Version 1.0
January 2007
Financial Reports
Financial Reporting in Enterprise Systems (ES) can be classified as either internal reporting, or statutory (external) reporting.
Modern management goals aim at real-time decision making, supported by the increased use of online reporting, interactive analysis, and intuitive reporting.
While companies are required to deploy ES to handle basic business transactions, they also need to efficiently retrieve transactional data in real-time of a specific information structure around cross-functional business processes.
The Rushmore Group, LLC

4. Financial Reports Reporting Types Internal External Reporting
Version 1.0
January 2007
Financial Reports
Reporting
Types
Internal
Reporting
External
Reporting ES
Database
Real time database, ready to supply with
Integrated Information across business processes
External Interfaces, ready to download reports in formats
ES Reporting Features
The Rushmore Group, LLC

5. Financial Reports (- continued)
Version 1.0
January 2007
Financial Reports (- continued)
Internal Reporting:
Provides reports that meet a wide range of internal informaton needs and enable
managerial decision-making.
Examples: inventory stock overview and plant maintenance reports
External Reporting
Provides reports to meet regulatory and external reporting requirements.
Examples: balance sheet, income statement
External Interface:
Enables download of report lists to several file formats including spreadsheet applications such as Microsoft Excel. Supports other external interfaces including
, Internet, PDAs, and print devices
Integrated Information:
Supplies real-time information that is fully integrated across cross-functional business processes and uses the same underlying data.
The Rushmore Group, LLC

6. Target Audience External Internal Legal Authorities Executives Banks
ECC 6.0
January 2008
Target Audience
External
Legal Authorities
Banks
Auditors
Shareholders
Insurance
Taxing Authorities
Media
Financial Analysts
Internal
Executives
Senior Management
Account managers
Administration Staff
Employees
There are two types of audiences: Internal and External.
Internally: The employees who run the company. This gives them the information needed to make decisions.
Externally: Anyone who has a financial stake in the company. This could be shareholders, creditors, government (taxes, fraud, etc.) insurance companies, or anyone who would like to purchase shares of the companies stock.
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

7. Financial Reports (- continued)
Version 1.0
January 2007
Financial Reports (- continued)
Guidelines for efficient and cost-effective reporting processes
Ensure optimal decision making through the improved use of information
Reduce data complexity and promote handoffs through smooth data flow
Concentrate on data analysis instead of scanning printed reports
The Rushmore Group, LLC

8. Financial Reports (- continued)
Version 1.0
January 2007
Financial Reports (- continued)
Reporting is a tool:
through which internal and external stakeholders can understand the organization’s financial performance as a result of the business decisions made by management in the period defined
Two categories of financial accounting reports:
displaying account information, and
generating financial statement.
The Rushmore Group, LLC

9. Financial Reports (- continued)
Version 1.0
January 2007
Financial Reports (- continued)
Accounting Information
Account information can be obtained at three levels according to the “Introduction to Financial Accounting”:
balance display,
line item list, and
original FI document.
The Rushmore Group, LLC

10. Version 1.0
January 2007
Financial Statements
The goal of financial accounting is to report data in order to meet legal and regulatory requirements.
The reporting takes the form of financial statements including
Balance sheet
Income statement (profit and loss), and
Cash Flows statement
The specific accounts that need to be included in these statements are determined by the external requirements.
The Rushmore Group, LLC

11. Version 1.0
January 2007
Financial Statement
Financial statements can be generated for different organizational levels including one or more company codes and business areas.
Financial statements are created from financial statement versions.
A financial statement version is a hierarchical grouping of general ledger accounts that must be included in the financial statement.
Several financial statement versions can be defined, and each is defined to meet different reporting requirements.
The Rushmore Group, LLC

12. Financial Statement The balance sheet summarizes
Version 1.0
January 2007
Financial Statement
The balance sheet summarizes
Assets,
Liabilities, and
Owner’s equity of a business at a point in time.
The income statement summarizes
revenues
expenses of a firm over a particular period of time
incomes before and after tax
The Rushmore Group, LLC

13. Version 1.0
January 2007
Financial Statement
A conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the analysis.
In the analysis of external financing for example, one is concerned with firm’s needs for funds, its financial condition/performance, and its business risk.
Upon analysis of these factors, senior managers are able to determine the firm’s financial needs and to negotiate with outside suppliers of capital.
The Rushmore Group, LLC

14. Version 1.0
Financial Statements
January 2007
Balance sheet accounts include assets, liabilities, and equity.
Assets = Liability + Equities
Profit and loss accounts include revenue and expenses within a given period of time (e.g., monthly, quarterly, or yearly)
Cash Flows (Statement)
The Rushmore Group, LLC

15. ECC 6.0
Balance Sheet – Assets
January 2008
Assets are things of value that a company owns or controls that accountants have agreed to measure in monetary terms.
Examples of these accounts include:
Current assets:
Cash
Accounts receivables
Inventory
Prepaid expense
Fixed assets
Land
Building
Equipment
Balance sheets
Assets
liability
Owner’s equity
Assets (good guys) generally good
Inventory is often an exception (too much is bad)
This is what the company owns or has
Balance Sheet
Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).
© SAP AG and The Rushmore Group, LLC 2008

16. Balance Sheet – Liabilities
ECC 6.0
Balance Sheet – Liabilities
January 2008
Liabilities are things that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms.
Examples of these accounts include:
Accounts payable
Notes payable
Bonds payable
Unearned revenue
Liabilities
Bad guys –
What a company owes to settle the accounts
Typically debt
Balance Sheet
Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

17. ECC 6.0
Balance Sheet – Equity
January 2008
Equity is simply the mathematical difference between assets and liabilities.
It includes the monetary amounts collected with respect to
all preferred and common stock transactions,
the aggregate net income reported since organization of the company, and
a reduction for dividends that have been paid to stockholders.
Balance Sheet
Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).
© SAP AG and The Rushmore Group, LLC 2008

18. Balance Sheet – Sample Assets Liabilities Equity Cash 1,000
Version 1.0
Balance Sheet – Sample
January 2007
Assets
Cash 1,000
Accounts Receivable 3,000
Equipment
Total Assets 4,500
Liabilities
Accounts Payable 2,250
Taxes Payable
Total Liabilities 2,500
Equity
Common Stock 1,750
Retained Earnings
Total Equity 2,000
Total Liabilities
and Equity 4,500
January 2007 (v1.0)
© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC
The Rushmore Group, LLC

19. Balance Sheet ECC 6.0 January 2008 Assets top Liabilities middle
Owner’s equity bottom
Compares one year the next
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

20. Version 1.0
Income Statement
January 2007
Presentation of an organization’s Revenues, Expenses, and Income for a given period of time (e.g., monthly, quarterly, or yearly)
Revenues, in a simple sense, are inflows of cash as a result of selling activities or the disposal of company assets
Expenses, in a simple sense, are outflows of cash or the creation of liabilities to support company operations
Net Income before TAX= Revenue–Expenses
Net Income after TAX= Revenue-Expenses -Tax
January 2007 (v1.0)
© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC
The Rushmore Group, LLC

21. Income Statement – Revenues
ECC 6.0
Income Statement – Revenues
January 2008
The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year.
Income Statement (Profit and Loss Statement)
Comparison of revenue and expenditure of a period to determine the results for the company and the sources of these results.
Often called the “P&L”
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

22. Income Statement – Expenses
ECC 6.0
Income Statement – Expenses
January 2008
The monetary amounts paid to vendors in settlement for goods purchased by company or services rendered to our firm by other companies during the current fiscal year.
Cost of Goods Sold (COGS)
Payroll
Utilities
Taxes
Interest
March 1st 1913 – Many companies have this as their fiscal year.
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

23. Income Statement - Sample
Version 1.0
Income Statement - Sample
January 2007
Revenue
Sales 11,000
Deductions
Total Revenue 10,250
Operating Expenses
Cost of Goods Sold 4,500
Operating Expenses 3,750
Total Expenses 8,250
Net Income Before Taxes 2,000
Taxes
Net Income 1,250
January 2007 (v1.0)
© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC
The Rushmore Group, LLC

24. Income Statement ECC 6.0 January 2008 Revenues Expenses
Profit on bottom
Microsoft’s income statement
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
© SAP AG and The Rushmore Group, LLC 2008

25. Statement of Cash Flows
Version 1.0
January 2007
Statement of Cash Flows
Considers the associated changes, both inflows and outflows, that have occurred in cash – arguably the most important of all assets – over a given period of time (e.g., monthly, quarterly, or annually)
January 2007 (v1.0)
© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC
The Rushmore Group, LLC

26. Version 1.0
Financial Ratios
January 2007
Financial ratios are the tools used to analyze financial condition and performance. Financial ratios can be divided into five basic types:
Liquidity,
leverage (debt),
coverage,
activity, and
profitability.
No one ratio is itself sufficient for realistic assessment of the financial condition and performance of a firm. With a group of ratio, reasonable judgments can be made.
Comparing one company with similar companies and industry standards over time is crucial. Such a comparison uncovers leading clues in evaluating changes and trends in the firm’s financial condition and profitability. This comparison may be historical, but it may also include an analysis of the future based on projected financial statements.
The Rushmore Group, LLC

27. Version 1.0
Financial Ratios
January 2007
The Rushmore Group, LLC

28. Version 1.0
Financial Ratios
January 2007
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29. Financial Ratios Version 1.0 January 2007
EBIT – Earning before interest & Tax
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30. Version 1.0
Financial Ratios
January 2007
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31. Version 1.0
Financial Ratios
January 2007
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32. Financial Reports SAP Implementation

33. R/3 SAP Module View Integrated Solution Client / Server Open Systems
Financial
Accounting
Sales &
Distribution
Materials
Mgmt.
Controlling
Production
Planning
R/3
Fixed Assets
Mgmt.
Integrated Solution
Human
Resources
Project
System
Client / Server
Quality
Maintenance
Open Systems
Workflow
Plant
Management
Industry
Solutions

34. SAP Reports Tools SAP Standard Reports (in focus)
Version 1.0
January 2007
SAP Reports Tools
SAP Standard Reports (in focus)
SAP Report Painter Report
SAP Query
ABAP Report
Data Warehouse (to introduce)
The Rushmore Group, LLC

35. SAP Standard Reports SAP has thousands of reports available to use.
Version 1.0
January 2007
SAP Standard Reports
SAP has thousands of reports available to use.
Each report can be customized by the user to meet different report requirements, by setting different report selection criteria.
The Rushmore Group, LLC

36. SAP Report Painter Report
Version 1.0
January 2007
SAP Report Painter Report
Used to deliver many tabular style management reports to produce various financial statements.
The Rushmore Group, LLC

37. SAP Query Used to run queries on SAP tables to return data.
Version 1.0
January 2007
SAP Query
Used to run queries on SAP tables to return data.
Before engaging in SAP Query, the user should look at the available standard reports in SAP; those reports that are based on the same tables should be able to return the same type of data the user is looking for.
The Rushmore Group, LLC

38. Version 1.0
January 2007
ABAP Report
ABAP/4 (Advanced Business Application Programming) is used to code SAP software and can also be used to customize reports.
The downside of ABAP may not be automatically compatible with upgraded versions.
The Rushmore Group, LLC

39. Version 1.0
January 2007
SAP Data Warehouse
SAP Netweaver Business Intelligence (BI/BW) is SAP’s own data warehousing tool
One benefit of using a data warehouse is that it reduces the load on SAP ECC (ERP Central Components) system.
The downside is that the data warehouse solution will be only updated overnight, then the data to be used may not be updated to the moment.
The Rushmore Group, LLC

40. SAP Standard Reports Three basic steps to running a standard report:
Version 1.0
January 2007
SAP Standard Reports
Three basic steps to running a standard report:
Access the report (find the SAP command transaction (T) code)
Enter selection criteria
Execute the report
The Rushmore Group, LLC

41. SAP Standard Reports Accounts Payable Reports
Version 1.0
January 2007
SAP Standard Reports
Accounts Payable Reports
Accounts Receivable Reports
Asset Accounting Reports
General Ledger Reports
Cost Centers:
Actual/Plan/Variance Report
Profitability Analysis:
Plan/Actual Comparison Report
Balance Sheet
Profit and Loss Statements
The Rushmore Group, LLC

42. Accounts Payable Reports
Version 1.0
Accounts Payable Reports
January 2007
It revolves around the reporting of invoices due for payment.
The information is important from a cash flow point of view, as each vendor invoice contains payment terms that determine when the invoice is due for payment.
Vendor line item report shows all the vendor items.
The Rushmore Group, LLC

43. Useful Reports in AP Area
Version 1.0
Useful Reports in AP Area
January 2007
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44. Vendor Document Display
Version 1.0
Vendor Document Display
January 2007
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45. Accounts Receivable Reports
Version 1.0
Accounts Receivable Reports
January 2007
It revolves around the reporting of unpaid (customer) items. This is more of an internal requirement than an external requirement. The information is important from a cash flow point of view.
Customer line item report shows all the customer’s items.
Customer balance statistics report monitors customer’s payments, especially pass-due items.
The Rushmore Group, LLC

46. Accounts Receivable Reports
Version 1.0
Accounts Receivable Reports
January 2007
The Rushmore Group, LLC

47. Customer (Receivable) Balance Display
Version 1.0
Customer (Receivable) Balance Display
January 2007
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48. Customer Line Item Display
Version 1.0
Customer Line Item Display
January 2007
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49. Customer Document Display
Version 1.0
Customer Document Display
January 2007
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50. Asset Accounting Reports
Version 1.0
Asset Accounting Reports
January 2007
Asset Explorer is the primary tool used to run asset accounting reports.
It provides analysis for a particular asset.
In addition, users can use its Asset History Sheet, which is very detailed asset register.
The Rushmore Group, LLC

51. Asset Accounting Reports
Version 1.0
Asset Accounting Reports
January 2007
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52. General Ledger Reports
Version 1.0
General Ledger Reports
January 2007
The most important reports of general ledger are:
balance sheet
income statement, and
cash flow.
They can be generated monthly, quarterly and annually
The Rushmore Group, LLC

53. General Ledger Reports
Version 1.0
General Ledger Reports
January 2007
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54. Cost Centers: Actual/Plan/Variance Report (internal report)
Version 1.0
Cost Centers: Actual/Plan/Variance Report (internal report)
January 2007
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55. Version 1.0
Profitability Analysis: Plan/Actual Comparison Report (internal report)
January 2007
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56. Profitability Analysis: Plan/Actual Comparison Report (in detail)
Version 1.0
Profitability Analysis: Plan/Actual Comparison Report (in detail)
January 2007
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57. Version 1.0
Balance Sheet
January 2007
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58. Balance Sheet (Assets)
Version 1.0
Balance Sheet (Assets)
January 2007
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59. Balance Sheet (Liabilities & Equity)
Version 1.0
Balance Sheet (Liabilities & Equity)
January 2007
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60. Version 1.0
Income Statements
January 2007
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61. Exercises: (Due date 2/25/2013)
FI 4A: Post Transfer of funds to Bank Account
MM6: Create a new vendor
MM7: Create material master for trading goods
MM8: Display Stock/Requirements list
MM9: Create a purchase requisition
MM10: Display stock/requirements list
MM11: Create request for quotation for your requisition
MM12: Maintain quotation from vendors
MM13: Evaluation quotations on price
MM14: Rejecting quotations
MM15: Create a purchase order referencing an RFQ
MM16: Create a goods receipt for the purchase order
MM17: Verify the purchase receipt of goods
MM18: Create an invoice receipt from vendor
MM19: Display purchase order history

62. Exercises: MM20: Create a goods receipt for purchase order
MM21: Create an invoice receipt from vendor
MM22: Post payment to vendor
MM23: Display vendor line items
MM24: Display and review general ledger account balances and individual line items
FI 17: Run balance sheet/profit and loss statements
FI 18: Assign General Ledger Accounts to Financial Statement Version
FI 19: Run Balance Sheet / Profit and Loss Statements