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