L04 Financial Statements & Ratios

L04 Financial Statements & Ratios - Financial...

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Unformatted text preview: Financial Statements Financial Ratios Accounting and Decision Making Financial Statements Review Financial Statements Provide: current and historical information to owners and creditors a convenient way for owners and creditors to set performance targets a convenient standard template for financial planning Overview Basic Income Statements Budgets Accounting Concepts Balance Sheets Data Entry (T- accounts) Income Statements The firms income statement shows income earned (profit) over a given time period usually one year (flow variable). Income (profits): Revenue minus Expenses * What is the difference between an expense and a debt? The Income Statement Summarizes the profitability of a company during a time period Major Divisions: Revenue & cost of goods sold Gross margin General administrative and selling expenses (GS&A) Operating income Debt service Taxable income Corporate Taxes Net income Revenues Money inflows to the firm (gross income) Typical firm: Revenues are generated from sales of the firms product Sports franchises are no exception Sales of tickets are the largest revenue source in most cases Revenues: Other Sources Revenue is also generated by interest income from savings and from investment dividends and sales Sports teams may also receive shared revenues collected and redistributed by their league. Sports Revenues Admissions (the gate, ticket sales) Premium seating Concessions and Parking Broadcast Revenues Local Share of National Advertising Royalties, Licensing Expenses Expenses represent the costs incurred during the period Typical firm: Wages of workers Other production costs Advertising and Promotion Maintenance of facilities Taxes and Insurance Cost of goods to sell (inventory) Travel Debt service Sports Expenses Sports franchises spend a much higher percentage on salaries than a typical firm....
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L04 Financial Statements & Ratios - Financial...

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