Balance Sheet and Income Statement Comparison

Birds eye-view of the Balance Sheet and Income statement. Please remember its very high level comparison.

 

Balance Sheet and Income Statement Comparison
Manufacturing Financial Services
Assets
Cash Cash
Accounts Rec Investments
Inventory Loans
Fixed Assets Bldg’s
Liabilities
Accounts Payables Deposits
Long Term Debt Savings
Equity Other Borrowings
Capital
 Inc/Exp
Sales Total Int. Income
COGS Total. Int Exp
Gross Margin NII
Oper. Exp (-) Non-Int Income (+)
EBIT Non-Int Exp (-)
Int Exp (-) Provision for Loan Losses (-)
EBT Operating Inc (pre tax)
Tax (-) Securties (Gain/Loss)
Income Tax (-)
Net Income Net Income

 

Retail World:

Net Sales = Invoiced Sales – Sales Discounts

Controllable contribution = Gross Profit – Direct Expenses

Profit before taxes = Controllable contribution – Indirect Expenses

Extended Cost = Unit Cost * total # of units bought in a single order

High Level Account Hierarchy in Financial Services Organization:

Total Rollup
All Accts
Net Income
Pre tax Net Income
Fed Taxes
Current Provision
SFAS133
Balance Sheet
Assets
Real Estate
Accrued Int. Rec
Prepaid Exp & Deferred Charges
Net Other Assets
Cash on Hand
Earning Assets
Liabilities & Capital
Stat Accounts

 

Healthcare Industry:

Income Statement:

REVENUES
Net patient service revenue
Other revenue
    Total revenues
EXPENSES
Salaries and wages
Fringe benefits
Interest expense
Depreciation
Provision for bad debts
Professional liability
Other (Utilities, Marketing etc)
    Total expenses
Excess of revenues over expenses:
  • Salaries & Wages is the highest expense
  • Net patient Revenue is usually reported as roll up. Medicare/HMO/PPO/Blue Cross net patient revenues are rolled up.
  • There can be operating revenues such as: Gain/losses related to disposal of equipment, investments such as joint ventures, tax-revenues
  • Note the terminology for Net Income: Excess of Rev over Exp.

Consolidated Balance Sheet:

 

ASSETS
Cash and investments
Patient accounts rec(net)
Inventories
Other current assets
  Total current assets
Gross equipment
Accumulated depreciation
  Net equipment
  Total assets
LIABILITIES AND FUND BALANCE
Accounts payable
Accruals
Current portion of LT debt
  Total current liabilities
Long-term debt
Net assets (Equity)
  Total liabilities and funds

Cash Flows:

CASH FLOW FROM OPERATIONS
Income from operations
Noncash expenses
Change in NWC (ex cash)
    Net cash flow from operations
CASH FLOW FROM INVESTING
Fixed asset acquisitions
CASH FLOW FROM FINANCING
Long-term debt
NET INCREASE (DECREASE) IN CASH
BEGINNING CASH/INVESTMENTS
ENDING CASH/INVESTMENTS
Cash account check

 

Balance Sheet of a company where software is an asset:

  • This is not a software Development organization.
  • However when you develop a software and other companies start using it and there by generate revenue, then you may consider as a fixed asset.
  • You will see extraordinary gains or losses in some P&L’s. The companies affected by Tsunami/Earthquake in Japan use this line item to declare the disaster losses.
Current assets
Cash and time deposits
Notes and accounts receivable-trade
Inventories
Deferred tax assets
Other current assets
Allowance for doubtful receivables
Total current assets
Fixed assets
Tangible fixed assets
  Buildings and structures
  Machinery, equipment and vehicles
  Land
  Lease Assets, net
  Construction in progress
  Other
Total tangible fixed assets
Intangible fixed assets
  Software
  Goodwil
Total intangible fixed assets
Investments and other assets
  Investment securities
  Net defined benefit asset
  Deferred tax assets
  Other
  Allowance for doubtful receivables
 Total investments and other assets
 Total fixed assets
 Total assets

 

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