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entering_financial_data [2024/01/30 14:34] – pimsadminentering_financial_data [2024/01/30 14:37] (current) – [How to treat Leased Plant and Equipment] pimsadmin
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 ====== Entering Financial Data ====== ====== Entering Financial Data ======
-===== Income Statement Data =====+ 
 +===== Income Statement =====
 The PIMS Income Statement uses the “Cost of Sales” method to show the Sales value for the year and allocate the associated costs to functional areas (see definitions below). All values should be taken from management accounts to ensure consistency. The PIMS Income Statement uses the “Cost of Sales” method to show the Sales value for the year and allocate the associated costs to functional areas (see definitions below). All values should be taken from management accounts to ensure consistency.
 If you use "total cost" accounting you can use the sales value of production: the differences in ratios to sales (e.g. EBIT / sales) are small.  If you use "total cost" accounting you can use the sales value of production: the differences in ratios to sales (e.g. EBIT / sales) are small. 
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 |EBIT |Earnings before interest and taxes (Net income before interest and tax) = sales minus purchases, operations, sales & marketing, R&D and G&A, before exceptional one-off items, financing or tax effects (also referred to as profit, operating profit, return, income).| |EBIT |Earnings before interest and taxes (Net income before interest and tax) = sales minus purchases, operations, sales & marketing, R&D and G&A, before exceptional one-off items, financing or tax effects (also referred to as profit, operating profit, return, income).|
  
-==== Balance Sheet ====+===== Balance Sheet =====
 On the balance sheet we focus on the operational assets and liabilities - not the financial ones - and therefore look at the business before financing. This means that we do not count cash and overdrafts as part of current assets or liabilities, and we do not include loans in liabilities. If you are in doubt as to whether to include a liability (or asset) test whether they are operational items, e.g. loans are not operational but owing money to your pension scheme is.  Particular issues arise when trading assets that would normally be a regular part of the business are owned by finance companies (e.g. factored receivables, leased plant and equipment).  The more you can recast the accounts as if you owned them, the more accurate will be your comparisons against PIMS benchmarks. On the balance sheet we focus on the operational assets and liabilities - not the financial ones - and therefore look at the business before financing. This means that we do not count cash and overdrafts as part of current assets or liabilities, and we do not include loans in liabilities. If you are in doubt as to whether to include a liability (or asset) test whether they are operational items, e.g. loans are not operational but owing money to your pension scheme is.  Particular issues arise when trading assets that would normally be a regular part of the business are owned by finance companies (e.g. factored receivables, leased plant and equipment).  The more you can recast the accounts as if you owned them, the more accurate will be your comparisons against PIMS benchmarks.
 For all balance sheet items, a year-average number is preferred, but year-end numbers are acceptable if similar. For all balance sheet items, a year-average number is preferred, but year-end numbers are acceptable if similar.
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 |Net Capital Employed (Average investment) |Working capital plus fixed assets at net book value, plus any other trading assets/liabilities that are a normal part of doing business (i.e. operational in nature). "Financial engineering" (e.g. goodwill, exceptional provisions, etc.) should be eliminated so that investment corresponds to EBIT. This is NOT the CAPEX (capital expenditure).| |Net Capital Employed (Average investment) |Working capital plus fixed assets at net book value, plus any other trading assets/liabilities that are a normal part of doing business (i.e. operational in nature). "Financial engineering" (e.g. goodwill, exceptional provisions, etc.) should be eliminated so that investment corresponds to EBIT. This is NOT the CAPEX (capital expenditure).|
  
-=== How to treat Leased Plant and Equipment ===+===== How to treat Leased Plant and Equipment =====
  
 Generally speaking, most companies treat leased plant and equipment as an operating lease to avoid it showing on the balance sheet. The annual lease cost is then treated as a rent on the income statement. Generally speaking, most companies treat leased plant and equipment as an operating lease to avoid it showing on the balance sheet. The annual lease cost is then treated as a rent on the income statement.
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 Depreciation/sales, but the reduction in par will only be roughly half the reduction in actual. Depreciation/sales, but the reduction in par will only be roughly half the reduction in actual.
  
-[[Fremium Analysis]]+[[Freemium Analysis]]
  
entering_financial_data.1706625279.txt.gz · Last modified: 2024/01/30 14:34 by pimsadmin