Understanding Assets, Liabilities, and Financial Ratios

Understanding Key Financial Components

Active Non-Current Assets

Intangible Assets

• Research and Development
• Administrative concessions, industrial property, and transfer rights
• Computer software

Fixed Assets

• Land and natural resources (not specified)
• Construction (not specified)
• Technical installations
• Machinery
• Cranes
• Furniture
• Equipment for process information
• Other tangible assets

Investment Property

• Land and natural resources (specified)
• Construction (specified)

Long-Term Financial Investments

Current Assets

Stocks

• Commercial
• Raw materials
• Current Products
• Finished Products

Receivables

• Customers
• Debtors
• Public Finance debtors
• Organizations-Social Security debtors

Available

• Banks and credit institutions
• Safety

Financial Returns

Financial (ROI, ROA): BAII / Total Assets: The higher, the better. For every €100 the company invests, it gets a profit of X.

Financial (ROE): BN / CP: Of every €100 that owners have in equity, they obtain a net profit of €x.

Sales: BAII / net turnover (sales): Gross profit the company extracts with respect to online orders. The higher, the better.

Financial Leverage Effect (EPF): BAI / BAII Professional / Equity

• > 1: Debt increases profitability and is therefore desirable.
• < 1: Debt is not desirable.
• = 1: The debt does not affect profitability.

Liabilities and Equity

Equity

• Capital / Capital
• Reservations
• Results - the exercise

Non-Current Liabilities

• Suppliers of immobilized assets (long-term)
• Long-term debt to credit institutions

Current Liabilities

• Suppliers
• Creditors for services
• Suppliers of immobilized assets (short-term)
• Short-term debt with credit entities
• Current liabilities
• Public Finance, creditors for tax concepts
• Organizations-Social Security Creditors

BN = B + OJ

Profit and Loss Statement

+ Revenue from operations

1. Net turnover
2. + or - Change in inventories of finished and ongoing goods
3. Other income from operations

- Expenses from operations

1. Supplies (± Variation in shopping of trade and raw materials). If we get initial and end inventories, we find the remaining variation.
2. Personnel expenses
3. Amortization of immobilized assets
4. Other expenses from operations

= INCOME BEFORE INCOME TAXES AND INTEREST (BAII)

+ Interest income - Interest expense

= FINANCIAL RESULTS

= PROFIT BEFORE TAXES (BAI)

- Income tax

= NET RESULT (BN)