04 Financial Documents

Balance Sheet sometimes also called Statement of Financial Position [Vermögensübersicht]

—> Gives a Snapshot [Momentaufnahme] of the financial status of a company to a specific moment

—> typically it is created at the end of reporting period (month, quarter or year)

It contains details of:

A) Assets:

—> anything that the company owns or controls that provides an economic benefit

—> In a balance sheet, assets are listed in categories according to how quickly they are expected to be monetized, sold or consumed

B) Liabilities:

—> Obligations [Verpflichtungen] or debts that the company has to third parties

—> liabilities are categorized based on their due date, or the timeframe within which you expect to pay them

C) Equity:

—> the residual amount belonging to the owners after deducting [abziehen] liabilities from assets.

Equity = Assets - Liabilities

A) Assets:

—> Assets are the things your comapny owns that have monetary value

It includes:

-> concrete items (cash, invetory, property [Immobilien] and equipment)

-> marketable securities [marktgängige Wertpapiere]

-> prepaid expanses [vorausbezahlte Ausgaben]

-> receivables from payers

-> intangible assets (like patents) [immaterielle Werte]

B) Liabilities [Verbindlichkeiten]

—> Liabilities reflect all the money your company owes to others

It includes:

-> Loans [Darlehen]

-> Accounts payable [Verbindlichkeiten aus Lieferungen und Leistungen]

-> Wages [Löhne]

-> Taxes and other debts

C) Owners Equity [Eigenkapital]

—> sometimes called net assets or net worth

—> represents the assets that remain after deducting what you owe [schulden]

—> Owners Equity may be your own, collective ownership rights (partnership) or stockholder ownership (corporation = Kapitalgesellschaft)

—> It measures the activity of a business over a period of time (month, quarter or year)

—> It can also have the name:

It basically tells you revenue, expenses, profit and loss

Basic Formula:

—> Revenues - expenses = net profit

—> Profit is the surplus that remains after all income exceeds expenses (including operating costs, taxes and depreciation [Abschreibungen])

—> Cash flow measures the actual cash flow into and out of the company (cash receipts and payments). It shows how much cash the company has available to pay bills or make investments.

Profit bewertet mehr die Rentabilität. Es handelt sich mehr um einen buchhalterischen Erfolg oder Verlust

Bei den Cashflows wird genaustens betrachtet ob zu jedem Zeitpunkt genug Cash vorhanden ist, um die nötigen Kosten zu decken.

—> Ein Unternehmen kann über einen Zeitraum zwar Gewinn machen aber nicht genügend Liquidität besitzen, um die Ausgaben zu stemmen

A) Revenue [Einnahmen]:

—> it is the money you receive in payment for your products or services

B) Operating Expanses [Expanses = Kosten]

—> Expanses that rise or fall based on your sales volume

C) Gross profit margin [Bruttogewinnspanne]

—> it is the amount that is left when you subtract operating expanses from Revenues

D) Overhead or fixed expenses:

—> stay each month almost the same, independent on the sales

—> includes salary of office staff, rent or insurance

E) Operating income:

—> it is the income after deducting the operating expanses and overhead expanses [Gemeinkosten]

F) Pre-Tax income

—> Income before federal and state governments take their share

G) Income Taxes

—> How income tax is shown on the P&L varies based on the type of legal entity [juristischen Person]

H) Net income [Nettogewinn]:

—> it is the final amount on most profit-and-loss statements

—> It represents the net total profit earned by the business during the period, above and beyond all related costs and expenses