analysis of financial statement presentation

Guide to Financial Statement Analysis

1. income statement analysis, 2. balance sheet and leverage ratios, 3. cash flow statement analysis, 4. rates of return and profitability analysis, more financial statement analysis, analysis of financial statements.

Guide to analyzing financial statements for financial analysts

One of the main tasks of an analyst is to perform an extensive analysis of  financial statements . In this free guide, we will break down the most important types and techniques of financial statement analysis.

This guide is designed to be useful for both beginners and advanced finance professionals, with the main topics covering: (1) the income statement, (2) the balance sheet, (3) the cash flow statement, and (4) rates of return.

Most analysts start their financial statement analysis with the  income statement . Intuitively, this is usually the first thing we think about with a business… we often ask questions such as, “How much revenue does it have?” “Is it profitable?” and “What are the margins like?”

In order to answer these questions, and much more, we will dive into the income statement to get started.

There are two main types of analysis we will perform: vertical analysis and horizontal analysis.

• Vertical Analysis

With this method of analysis, we will look up and down the income statement (hence, “vertical” analysis) to see how every line item compares to revenue, as a percentage.

For example, in the income statement shown below, we have the total dollar amounts and the percentages, which make up the vertical analysis.

As you see in the above example, we do a thorough analysis of the income statement by seeing each line item as a proportion of  revenue .

The key metrics we look at are:

• Cost of Goods Sold  (COGS) as a percent of revenue
• Gross profit  as a percent of revenue
• Depreciation  as a percent of revenue
• Selling General & Administrative ( SG&A ) as a percent of revenue
• Interest  as a percent of revenue
• Earnings Before Tax (EBT) as a percent of revenue
• Tax as a percent of revenue
• Net earnings  as a percent of revenue

To learn how to perform this analysis step-by-step, please check out our  Financial   Analysis Fundamentals Course .

Key Highlights

• One of the main tasks of a financial analyst is to perform an extensive analysis of a company’s financial statements. This usually begins with the income statement but also includes the balance sheet and cash flow statement.
• The main goal of financial analysis is to measure a company’s financial performance over time and against its peers.
• This analysis can then be used to forecast a company’s financial statements into the future.

Horizontal Analysis

Now it’s time to look at a different way to evaluate the income statement. With horizontal analysis, we look at the  year-over-year  (YoY) change in each line item.

In order to perform this exercise, you need to take the value in Period N and divide it by the value in Period N-1 and then subtract 1 from that number to get the percent change.

For the below example, revenue in Year 3 was $55,749, and in Year 2, it was $53,494. The YoY change in revenue is equal to $55,749 / $53,494 minus one, which equals 4.2%.

To see exactly how to perform this horizontal analysis of financial statements, please enroll in our Financial Analysis Fundamentals Course now!

Let’s move on to the  balance sheet . In this section of financial statement analysis, we will evaluate the operational efficiency of the business. We will take several items on the income statement and compare them to accounts on the balance sheet.

The balance sheet metrics can be divided into several categories, including liquidity, leverage, and operational efficiency.

The main liquidity ratios for a business are:

• Quick ratio
• Current ratio
• Net working capital

The main leverage ratios are:

• Debt to equity
• Debt to capital
• Debt to EBITDA
• Interest coverage
• Fixed charge coverage ratio

The main operating efficiency ratios are:

• Inventory turnover
• Accounts receivable days
• Accounts payable days
• Total asset turnover
• Net asset turnover

Using the above financial ratios, we can determine how efficiently a company is generating revenue and how quickly it’s selling inventory.

Using the financial ratios derived from the balance sheet and comparing them historically versus industry averages or competitors will help you assess the solvency and leverage of a business.

In our course on Analysis   of Financial Statements , we explore all the above metrics and ratios in great detail.

With the income statement and balance sheet under our belt, let’s look at the  cash flow statement  and all the insights it tells us about the business.

The cash flow statement will help us understand the inflows and outflows of cash over the time period we’re looking at.

Cash flow statement overview

The cash flow statement, or statement of cash flow, consists of three components:

• Cash from operations
• Cash used in investing
• Cash from financing

Each of these three sections tells us a unique and important part of the company’s sources and uses of cash over a specific time period.

Many investors consider the cash flow statement the most important indicator of a company’s performance.

Today, investors quickly flip to this section to see if the company is actually making money or not and what its funding requirements are.

It’s important to understand how different ratios can be used to properly assess the operation of an organization from a cash management standpoint.

Below is an example of the cash flow statement and its three main components.  Linking the 3 statements  together in Excel is the building block of financial modeling. To learn more, please see our  online courses  to learn the process step by step.

In this part of our analysis of financial statements, we unlock the drivers of financial performance. By using a “pyramid” of ratios, we are able to demonstrate how you can determine the profitability, efficiency, and leverage drivers for any business.

This is the most advanced section of our financial analysis course, and we recommend that you watch a demonstration of how professionals perform this analysis.

The course includes a hands-on case study and  Excel templates  that can be used to calculate individual ratios and a pyramid of ratios from any set of financial statements.

The key insights to be derived from the pyramid of ratios include:

• Return on equity ratio  (ROE)
• Profitability, efficiency and leverage ratios
• Primary, secondary and tertiary ratios
• Dupont analysis

By constructing the pyramid of ratios, you will gain an extremely solid understanding of the business and its financial statements.

Enroll in our financial analysis course to get started now!

We hope this guide on the analysis of financial statements has been a valuable resource for you. If you’d like to keep learning with free CFI resources, we highly recommend these additional guides to improve your financial statement analysis:

• How to Link the 3 Financial Statements
• Aggregation
• Bottom-Up Forecasting
• Interactive Career Map
• See all accounting resources
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10 Slide Ideas for Financial Report Presentation

• August 17, 2021
• Financial presentations , Management presentations , PowerPoint templates for download

Last Updated on June 28, 2024 by Barbara

Working on a company financial report, and want to make it different this time? Financial reviews full of data and analysis are typically difficult to digest by non-financial audiences, and it can be challenging to communicate the meaning behind the figures. If you want to disclose your quarterly or annual numbers in a simple and understandable way to your key stakeholders, check our blog for examples and inspiration.

A financial report is a management tool used to communicate key financial information to both internal and external stakeholders by covering aspects of financial affairs with the help of KPIs, such as income statements, balance sheets, cash flow, or financial ratios analysis. See how to prepare structured and professional financial slides smoothly using PowerPoint tools.

All graphics examples presented below can be downloaded as an editable source. Explore the Financial Report and Performance Indicators Presentation for PowerPoint.

Get inspired by seven examples of how you can illustrate the components of your financial report presentation and a quick instruction on how you can create a P&L Statement table using simple design tricks.

Visualize your key financial indicators

Such a general slide with a financial report presentation summary will help to analyze the big picture and ensure you’re on the same page with the audience.

You can list the common key indicators such as Global Net Revenue, Like for Like Growth, Cash Conversion Cycle, and Profit Before Tax. A neutral background picture makes the slide more attractive and circles with highlights on the right help to stay focused on important numbers.

Show revenue and profit snapshots on one dashboard slide

This slide shows how you can summarize net sales and profitability evolution using gauges and a simple bar chart. The dashboard illustrates typical profitability measures: Net Sales, Operating Expenses, EBIDTA, and PBT as easy-to-read gauge charts. The profit growth over the years is shown as a clear bar chart.

Illustrate revenue highlights with clear charts

If you’d like to include additional data, for example, revenue highlights over time or regions, you can do it as on the slides above. The first one presents a sales distribution breakdown by months and categories. The second slide example presents sales split by worldwide market geographies on a world map as a light background underlining the location of the markets.

Small elements, like pin icons, doughnut charts, and color-coding will help you add a professional look to your presentation.

Pro tip: To help non-financial people digest the data, keep your slides short, don’t stuff them with jargon words . Use illustrations, and make the most essential data points clearly visible.

Include balance sheet and cash flow tables

The very common problem is the unreadability of massive tables. The balance sheet and cash flow statement will be definitely complex, as you need to squeeze many numbers inside.

Notice how color-coding is used for various table sections, and illustrative symbols, which don’t steal attention from the content, but rather nicely add up. A text box aside can be used for your comments or notes.

Compare key drivers of revenue growth

To illustrate the comparison of several growth drivers, you can apply such stacked bars.

Notice how specific drivers (E-commerce, Emerging Markets, Organic Growth, New Product Lines) are illustrated by corresponding icon symbols, all in one consistent style.

Visualize revenue analysis for each quarter in your financial report

To present an analysis of sales revenue over the year, you can use such a bar chart. It’s slightly enhanced by adding quarter signs over the data chart.

This data chart illustrates revenue analysis split by quarters and channels. If you have some comments or notes you’d like to discuss, we advise putting the most essential point in bold.

Present your financial metrics and indicators as a dashboard grid

Want to go deeper and include the analysis of some ratios? A good idea is to firstly remind your audience what are those indicators and what exactly they show.

If you have more items to show on one slide, it’s good to organize them into some regular grid. Make sure all elements are aligned to make it look professional.

If you have more items to show on one slide, it’s good to organize them to some regular grid.

You can include general definitions and development of key financial analysis ratios e.g. growth, profitability, liquidity, efficiency, solvency, and capital market ratios. On the slide example, you can see the capital market ratios KPI line chart which shows the Dividend Yield and P/E Ratio change over the years.

Guide on how to redesign P&L Statement to a stylish table

Here’s a step-by-step guide on how you can create a P&L Statement table using simple shapes, icons, and a few tricks that will save you time.

1. Use simple PowerPoint shapes to create a stylish table design.

2. Adjust your source P&L table to be readable.

The trick is to have enough margin inside the table cell.

3. Enhance the table header

Add ribbon shapes as an additional header row to make the table look nicer.

4. Redesign the first column

You can add stylish arrows in a place of 1st table column.

5. Enrich your table with icons and a background picture.

See the whole instruction and other visual examples here: How to Create an Effective Company Financial Report Using PowerPoint.

Need to prepare a broader annual report and focus on business highlights? See how to create a comprehensive overview of activities using graphs, icons, infographic elements, and data-driven charts in this blog .

Resource: Financial Report and Performance Indicators Presentation

The graphics in this blog are a part of our financial report layouts collection. Our financial review deck incorporates 30 infographic slide templates for a financial summary overview, balance sheets with assets and liabilities, financial analysis presentation, income statements, profit and loss reports, revenue and profit snapshots, cash flow statements, explain types of financial ratios, key growth drivers, or breakdown of your operational expenses.

You can reuse graphs and charts, and tailor them to your needs in order to make your slides clear and easy to understand. See the full deck here:

Using concise, modern images will make your PowerPoint structured and consistent. To make your presentations even more appealing, consider also using this collection of professionally designed diagram layouts .

More Resources to Get Inspired

If you’re looking for more design inspiration, check our movie guide on how to present financial reports, financial analyses, and financial highlights professionally (you’ll find many more practical tips on our YouTube channel):

Subscribe to the newsletter  and follow our  YouTube channel  to get more design tips and slide inspiration.

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Handbook: Financial statement presentation

Handbook | November 2023

Latest edition: In-depth guide on presentation and disclosure requirements, plus considerations under SEC regulations.

Using detailed Q&As and examples, we explain various presentation and general disclosure requirements included in the Codification (i.e. ASC 205 to ASC 280), other broad topics (e.g. related parties under ASC 850 and subsequent events under ASC 855) and SEC regulations. This November 2023 edition incorporates updated guidance and interpretations.

Applicability

• All entities

Relevant dates

• Effective immediately

Key impacts

In the financial statement process, considerable time is devoted to determining what items get recorded and how to account for them, but the critical final mile is determining how they need to appear – i.e. how they are presented and disclosed.

Once the debits and credits have been settled, presentation and disclosure is how that information is conveyed to financial statement users in a transparent, understandable and consistent manner. Disclosure goes ‘behind the numbers’ and is necessary to fully understand the financial statements.

ASC 205 to 280 in the FASB’s Accounting Standards Codification® are dedicated to presentation and disclosure and provide the baseline requirements. Other ASCs address more detailed requirements, specific to certain transactions or industries. For SEC registrants, there is yet more guidance that contains many additional requirements, and which has helped shape practices over the years for all other entities.

In this Handbook, we pull together many of the general requirements and practices to provide you with a fuller picture of how the different financial statements are constructed and how they interact with one another. 

Report Contents

• Financial statements: general principles
• Balance sheet
• Income statement
• Comprehensive income
• Notes to the financial statements
• Risks and uncertainties
• Related parties
• Subsequent events

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Financial statement analysis powerpoint presentation slides

In case you need to present economic status of your company then our content-ready financial statement analysis PowerPoint Presentation is ideal for you. This income statement PPT presentation having multiple slides such as financial projections, key financial ratios, liquidity ratios, cash flow statement KPIs, profitability ratios, activity ratios, solvency ratios, income statement overview and funding updates etc. This cash flow assessment PowerPoint template goes well with topics like profitability analysis, business impact analysis, financial health, and income statement, balance sheet, statement of cash flow, business performance analysis, financial health, and future prospects of an organization, project future performance, economic analysis, company analysis, business valuation, fundamental analysis. For successful business presentation, PowerPoint background is as important as the content in the slides. Our accounting statement PPT slide provides you both content rich as well as professional slides. Download our financial statement analysis presentation slides to project your business future performance. Elucidate on your ideas with our Financial Statement Analysis Powerpoint Presentation Slides. Drive your team to excellence.

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PowerPoint presentation slides

This PowerPoint presentation contains 74 slides. PowerPoint templates are 100 percent editable. Presentation templates are accessible in both formats standard and widescreen. All slides provided in this product are compatible with Google Slides. This PPT is useful for the professional financial analyst to measure the value of a company and its stock or debt.

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• Themes , Finance , Money , Business Slides , Financials , Complete Decks , All Decks , Financial Services , Financial Analysis , Finance and Accounting
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• Business Valuation ,
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Content of this Powerpoint Presentation

Slide 1 : This slide introduces Financial Statement Analysis. State Your Company Name and begin. Slide 2 : This is an Agenda slide. Present it cohesively here. Slide 3 : This is P&L - KPIs showcasing- COGS, Net Profit, Operating Profit, Revenue CAGR. Slide 4 : This is P&L - KPIs (Tabular Form) slide. Slide 5 : This slide presents Balance Sheet - KPIs Current Liabilities,, Total Liabilities Total Assets, Current Assets CAGR. Slide 6 : This is a Balance Sheet - KPIs (Tabular Form) slide. Slide 7 : This is a Balance Sheet -...continued KPIs (Tabular Form) slide. Slide 8 : This slide showcases Cash Flow Statement - KPIs displaying- Financing Activities, Net Increase in Cash, Investing Activities, Operations CAGR. Slide 9 : This is a Cash Flow Statement-KPIs (Tabular Form) slide. Slide 10 : This slide shows Financial Projections – P&L Income Statement (USD MM). Slide 11 : This slide presents Financial Projections – Balance Sheet. Slide 12 : This slide presents Key Financial Ratios of- P/E Ratio, Debt Equity Ratio, Current Ratio with- Return on Assets, Return on Equity, Return on Investment, Return on Assets. Slide 13 : This slide presents Key Financial Ratios of- P/E Ratio, Debt Equity Ratio, Current Ratio with- Return on Assets, Return on Equity, Return on Investment, Return on Assets. Slide 14 : This slide presents Key Financial Ratios of- Liquidity, Profitability, Activity, Solvency. Slide 15 : This slide showcases Liquidity Ratios displaying- Current Ratio: Current Assets/ Current liabilities, Quick Ratio: Current Assets/ Current liabilities. Slide 16 : This slide showcases Liquidity Ratios displaying- Current Ratio: Current Assets/ Current liabilities, Quick Ratio: Current Assets/ Current liabilities. Slide 17 : This slide presents Profitability Ratios (1/3) displaying- Net Profit Ratio: Net Profit After Tax/ Net Sales, Gross Profit Ratio: Gross Profit / Net Sales. Slide 18 : This slide presents Profitability Ratios (1/3) displaying- Net Profit Ratio: Net Profit After Tax/ Net Sales, Gross Profit Ratio: Gross Profit / Net Sales. Slide 19 : This slide presents Profitability Ratios (1/3) displaying- Net Profit Ratio: Net Profit After Tax/ Net Sales, Gross Profit Ratio: Gross Profit / Net Sales. Slide 20 : This slide presents Profitability Ratios (1/3) displaying- Net Profit Ratio: Net Profit After Tax/ Net Sales, Gross Profit Ratio: Gross Profit / Net Sales. Slide 21 : This slide shows Profitability Ratios (3/3) displaying- ROCE: Net operating Profit/ Employed Capital ROA: Net income/ Total Assets Slide 22 : This slide shows Profitability Ratios (3/3) displaying- ROCE: Net operating Profit/ Employed Capital ROA: Net income/ Total Assets Slide 23 : This slide showcases Activity Ratios (1/2) displaying- Inventory Turnover: COGS / Average Inventory, Receivable Turnover: Net Credit Sales/ Average Accounts Receivable. Slide 24 : This slide showcases Activity Ratios (1/2) displaying- Inventory Turnover: COGS / Average Inventory, Receivable Turnover: Net Credit Sales/ Average Accounts Receivable. Slide 25 : This slide showcases Activity Ratios (1/2) displaying- Total Asset Turnover, Net Sales/ Average Total Assets, Fixed Assets Turnover, Net Sales/ Fixed Assets. Slide 26 : This slide showcases Activity Ratios (1/2) displaying- Total Asset Turnover, Net Sales/ Average Total Assets, Fixed Assets Turnover, Net Sales/ Fixed Assets. Slide 27 : This slide shows Solvency Ratios displaying- Debt-Equity Ratio: Total Liabilities / Total Equity, Time Interest Earned Ratio: EBIT/ Interest Expense. Slide 28 : This slide shows Solvency Ratios displaying- Debt-Equity Ratio: Total Liabilities / Total Equity, Time Interest Earned Ratio: EBIT/ Interest Expense. Slide 29 : This is an Income Statement Overview in graphical form. Slide 30 : This slide showcases Funding Updates - Debt in tabular form. Slide 31 : This slide showcases Funding Updates - Equity in tabular form. Slide 32 : This slide showcases Icons For Financial Statement Analysis. Use them as per requirement. Slide 33 : This slide is titled Additional Slides. You may change the slide content as per need. Slide 34 : This is Our Mission slide with Vision and Goal etc. icon imagery. State them here. Slide 35 : This is an About Our Company slide. Show company/team specifications etc. here. Slide 36 : This slide presents Meet Our Team with name, designation to put relevant information. Slide 37 : This is Our Goal slide. State them here. Slide 38 : This slide shows Comparison in a creative manner. State comparing aspects here. Slide 39 : This slide shows Financial Score. State financial aspects here. Slide 40 : This is a Location slide of a world map image to show global growth, presence etc. Slide 41 : This is a Quotes slide. State business message, beliefs etc. here. Slide 42 : This is a Dashboard slide to display metrics, kpis, etc. Slide 43 : This slide displays Important Notes to flash company event, news or anything to highlight. Slide 44 : This slide displays Newspaper image to flash company event, news or anything to highlight. You may change the content as per need. Slide 45 : This is a Puzzle image slide to show information, specifications etc. Slide 46 : This is Our Main Target slide to show targets, plans etc Slide 47 : This is a Circular image slide to show information, specifications etc. Slide 48 : This is a Venn diagram image slide to show information, specifications etc. Slide 49 : This is a Mind Map Chart slide to show information, segregation, specifications etc. Slide 50 : This is a Matrix slide (bcg) to show information, specifications, comparison etc. Slide 51 : This is a SWOT Analysis slide. Slide 52 : This is continuation of Timeline slide to show growth, evolution etc. Slide 53 : This slide showcases Lego imagery. Present information, specifications etc. here. Slide 54 : This slide shows Silhouettes image with text boxes. State information etc. here. Slide 55 : This is a Hierarchy slide to state team specifications, organizational structure etc. Slide 56 : This is an Idea Bulb slide to state team specifications, organizational structure etc. Slide 57 : This slide shows a Magnifying glass image with text boxes. State information etc. here. Slide 58 : This slide displays a Funnel image. State information, funneling aspects etc. here. Slide 59 : This slide is titled Our Charts and Graphs to move forward. You may change the slide content as per need. Slide 60 : This slide displays a Bar Graph for two product/entity comparison, information, specifications etc. Slide 61 : This slide presents a Column Chart for two product/entity comparison, information, specifications etc. Slide 62 : This slide showcases a Line Chart for two product/entity comparison, information, specifications etc. Slide 63 : This slide presents a Pie Chart for two product/entity comparison, information, specifications etc. Slide 64 : This slide displays an Area Chart for two product/entity comparison, information, specifications etc. Slide 65 : This slide presents a Scatter Chart for two product/entity comparison, information, specifications etc. Slide 66 : This slide showcases a Stock Chart for two product/entity comparison, information, specifications etc. Slide 67 : This slide presents a Radar Chart for two product/entity comparison, information, specifications etc. Slide 68 : This slide showcases a Combo Chart for two product/entity comparison, information, specifications etc. Slide 69 : This is a Thank You slide with Address# street number, city, state, Contact Numbers, Email Address.

Financial statement analysis powerpoint presentation slides with all 69 slides:

Your thoughts are truly comprehensive. Add another dimension with our Financial Statement Analysis Powerpoint Presentation Slides.

Ratings and Reviews

by Cristopher Cole

June 11, 2021

by Clement Patel

June 10, 2021

by Rahul Satija

December 27, 2019

Financial Statements: Essential Guide to Analysis and Interpretation

• Banking & Finance
• Bookkeeping
• Business Operations
• Starting a Business

Financial statements are vital tools for understanding the financial health and performance of a business. These documents provide a comprehensive overview of a company’s financial activities, allowing investors, analysts, and other stakeholders to make informed decisions about the business’s value and future prospects. Financial statements are primarily made up of four main components: the balance sheet, income statement, cash flow statement, and statement of changes in equity.

Each of these components plays a crucial role in painting a complete picture of a company’s financial situation. The balance sheet outlines a company’s assets, liabilities, and shareholders’ equity, showcasing its net worth at a specific point in time. The income statement, on the other hand, illustrates a company’s revenues and expenses over a particular period, indicating its profitability. The cash flow statement displays the inflow and outflow of cash within a business, highlighting its liquidity and financial flexibility. Lastly, the statement of changes in equity depicts alterations to a company’s equity over time, reflecting the distribution of profits and additional investments or withdrawals by owners.

Key Takeaways

• Financial statements provide a comprehensive understanding of a company’s financial health.
• The four main components are balance sheet, income statement, cash flow statement, and statement of changes in equity.
• These statements equip stakeholders with crucial information for decision-making and valuation purposes.

Understanding Financial Statements

Financial statements are formal records that represent a company’s financial activities and position. They are essential tools for decision-making, whether for internal management or external parties, such as investors and creditors. In this section, we will discuss the different types of financial statements, their components, and why they are crucial for stakeholders.

Types of Financial Statements

There are four main types of financial statements:

• Income Statement: Determines a company’s profitability by listing revenue and expenses for a specific period.
• Balance Sheet: Presents a company’s financial position by displaying its assets, liabilities, and equity at a particular point in time.
• Cash Flow Statement: Examines a company’s cash inflows and outflows by categorizing them into operating, investing, and financing activities.
• Statement of Comprehensive Income: This statement displays the changes in equity, including both profits and losses, during a specific period.

Components of Financial Statements

Each financial statement has unique components that provide valuable insights into a company’s financial performance and health. Below are some of the primary components:

Income Statement:

• Revenue: The money a company earns from selling goods or providing services.
• Cost of Goods Sold (COGS): The direct costs associated with producing goods or delivering services.
• Operating Expenses: The indirect costs incurred to run the business, such as salaries, rent, and utilities.
• Net Income: The final profit or loss after considering all revenue and expenses.

Balance Sheet:

• Assets: Resources owned by a company that have economic value.
• Liabilities: The financial obligations a company owes to other parties.
• Equity: The residual interest in the assets after deducting liabilities. It represents the owners’ claims on the company’s assets.

Cash Flow Statement:

• Operating Activities: Cash flows related to a company’s core business operations.
• Investing Activities: Cash flows from transactions involving long-term assets, such as purchasing or selling property, plant, and equipment.
• Financing Activities: Cash flows related to raising or repaying capital, such as issuing stocks or paying dividends.

Importance of Financial Statements

Financial statements play a critical role in helping various stakeholders understand a company’s financial position and performance. Some notable benefits include:

• Decision-making: Management uses financial statements to make informed decisions about the company’s operations, resource allocation, and future plans.
• Performance Evaluation: Financial statements allow stakeholders to gauge a company’s profitability, liquidity, solvency, and overall financial health.
• Investor and Creditor Analysis: Investors and creditors review financial statements to assess the risk and potential return before making financing or investment decisions.
• Regulatory Compliance: Companies must adhere to accounting standards and regulations when preparing financial statements, ensuring transparency and comparability between different businesses.

The Balance Sheet

The balance sheet is a crucial financial statement that provides a snapshot of a company’s financial position at a specific point in time. It consists of three main components: assets , liabilities , and shareholders’ equity . The balance sheet follows the fundamental accounting equation:

Total Assets = Liabilities + Shareholders’ Equity

Assets are the resources a company owns or controls with the expectation that they will provide future economic benefit. They are classified into two main categories:

• Current assets : These are short-term assets, expected to be converted to cash or used within one year. Examples include cash, accounts receivable, inventory, and prepaid expenses.
• Non-current assets : Also known as long-term or fixed assets, these are not expected to be converted to cash within one year. Examples include property, plant and equipment (PPE), intangible assets (such as patents and trademarks), and long-term investments.

Liabilities

Liabilities represent the company’s obligations to other parties, such as payments to suppliers or borrowed funds. Similar to assets, they are also divided into two categories:

• Current liabilities : These are short-term obligations, expected to be settled within a year. Examples include accounts payable, short-term debt, and accrued expenses.
• Non-current liabilities : Also known as long-term liabilities, these obligations are not expected to be settled within one year. Examples include long-term debt, deferred tax liabilities, and pension obligations.

Shareholders’ Equity

Shareholders’ equity, also known as net worth or owner’s equity, represents the residual interest in the assets of a company after deducting liabilities. In other words, it is the value left for the company’s owners if all assets were used to pay off all liabilities. The main components of shareholders’ equity are:

• Common stock: This represents the initial investment made by shareholders, also known as paid-in capital.
• Retained earnings: These are the accumulated earnings (or losses) of a company that have been reinvested, rather than distributed as dividends.
• Treasury stock: This refers to the company’s own shares that have been repurchased but not yet retired or cancelled.
• Other comprehensive income: This includes the gains and losses that are not included in the net income calculation, such as unrealized gains or losses on investments.

Together, the balance sheet provides a comprehensive view of a company’s financial position, illustrating the relationship between its assets, liabilities, and shareholders’ equity at a specific moment in time.

The Income Statement

The income statement is a crucial financial statement that reflects a company’s financial performance over a specific accounting period. It displays a company’s revenue, expenses, and the resulting profit or loss. The income statement is essential for understanding the financial health of a business and is often referred to as a profit and loss (P&L) statement or statement of earnings.

Revenue, also known as sales or income , represents the total amount of money a company earns from its operations. It is typically presented as the top line of the income statement. Revenue can be generated from various sources, such as product sales, rendering services, or interest and dividend income from investments.

Expenses are the costs incurred by a business to generate revenue. There are several types of expenses on an income statement, some of which include:

• Cost of Goods Sold (COGS) : The direct cost of producing the goods or services that a company sells. This may include the raw materials, labor, and manufacturing expenses.
• Operating Expenses : The indirect costs associated with running a business, such as sales and marketing, office expenses, and rent.
• Depreciation and Amortization : The systematic allocation of the cost of tangible and intangible assets over their estimated useful life.
• Interest Expense : The cost of borrowing money to finance the company’s operations.
• Taxes : The financial obligation a company owes to federal, state, and local governments.

Profit or Loss

The income statement highlights several key indicators of a company’s financial performance, such as:

• Gross Profit : Calculated as Revenue – Cost of Goods Sold . This indicates how much money the company makes from selling its products or services before accounting for operating expenses.
• Operating Profit (EBIT) : Calculated as Gross Profit – Operating Expenses . It represents the profit a company generates from its core business operations, without considering non-operating activities and financing costs.
• Net Income (Profit or Loss) : This is the bottom line of the income statement, which shows the overall profit or loss of a company after considering all revenue and expenses for a specific period. It is calculated as Operating Profit – Non-operating Expenses + Non-operating Income – Taxes .
• Gross Margin : Expressed as a percentage, this shows the proportion of gross profit to revenue. It represents a company’s efficiency in converting raw materials and labor into income.

An income statement serves as a vital tool for investors, managers, and other stakeholders to assess a company’s financial performance and make informed decisions.

The Cash Flow Statement

The cash flow statement is a crucial financial statement that summarizes the movement of cash and cash equivalents in and out of a company. It provides essential insights into a company’s liquidity, solvency, and overall financial health.

Operating Activities

Operating activities refer to the primary cash sources and uses generated by a company’s regular business operations. These activities are central to understanding the cash flow statement as they reveal how well a company is generating cash from its core business. Examples of operating cash flows include:

• Cash received from customers
• Cash payments to suppliers and employees
• Interest payments or receipts
• Income tax payments

Typically, cash flow from operating activities is calculated using the indirect method , which starts with net income and adjusts for non-cash items and changes in working capital.

Investing Activities

Investing activities encompass the cash flows from the acquisition and disposal of long-term assets, as well as investment in other companies or securities. These activities provide insights into a company’s strategy for growth and development. Cash flows from investing activities may include:

• Purchase or sale of property, plant, and equipment (PPE)
• Acquisitions or disposals of subsidiaries and other businesses
• Investments in or proceeds from the sale of financial instruments, such as stocks and bonds

A negative cash flow from investing activities indicates that the company is investing in its growth and development, while a positive cash flow signifies that the company is divesting assets.

Financing Activities

Financing activities represent the cash flows related to obtaining and repaying capital through borrowing or equity financing. This section is particularly relevant for assessing a company’s financial structure and its ability to raise or return funds to investors. Common financing cash flows include:

• Issuance or repurchase of a company’s own shares
• Dividend payments to shareholders
• Borrowings or repayments of debt, such as bank loans or bonds

By analyzing the cash flow statement and its three main components, stakeholders can understand a company’s performance in managing its cash resources and evaluate its financial position more accurately.

Analyzing Financial Performance

When analyzing a company’s financial performance, it’s crucial to evaluate its financial statements to understand its overall standing in categories such as assets, liabilities, equity, expenses, revenue, and profitability. In this section, we will explore various methods of analysis, focusing on financial ratios, trends, and comparisons.

Financial Ratios

Financial ratios allow businesses and investors to assess a company’s performance by comparing various financial aspects. Some of the key financial ratios that can be used to analyze a company’s performance include:

• Gross Profit Margin : Calculates the percentage of revenue that remains after deducting the cost of goods sold (COGS). Gross Profit Margin = (Revenue – COGS) / Revenue
• Return on Equity (ROE) : Measures the company’s ability to generate profits from its shareholders’ equity. ROE = Net Income / Shareholders’ Equity
• Current Ratio : Indicates a company’s ability to pay its short-term liabilities using its short-term assets. Current Ratio = Current Assets / Current Liabilities
• Quick Ratio : Also known as the acid-test ratio, it’s a more stringent measure of liquidity. Quick Ratio = (Current Assets – Inventory) / Current Liabilities
• Asset Turnover : Shows how efficiently a company generates revenue from its assets. Asset Turnover = Revenue / Average Total Assets
• Inventory Turnover : Measures how quickly a company sells its inventory. Inventory Turnover = COGS / Average Inventory

Trends and Comparisons

Analyzing trends and making comparisons with industry benchmarks can also provide valuable insights into a company’s financial performance. Some of the commonly used methods are:

• Horizontal analysis : This method involves comparing financial statement items over time to identify trends and changes in the company’s performance. For instance, one could compare a company’s revenue growth over multiple periods.
• Vertical analysis : Also known as common-size analysis, this method expresses each item in the financial statement as a percentage of a base number. For example, in the income statement, each item can be expressed as a percentage of revenue, allowing for better comparisons across companies of different sizes.
• Industry comparisons : Comparing a company’s financial ratios and performance metrics to industry averages or competitors’ data can highlight its strengths and weaknesses. This helps in understanding a company’s position within its industry and guides decision-making.

Taking the time to analyze financial performance using financial ratios, trends, and comparisons is crucial in making well-informed decisions regarding a company’s health and potential for growth.

The Role of Standards and Regulations

Financial statements play a critical role in providing essential information to investors, creditors, and other stakeholders. To ensure transparency, reliability, and comparability of these statements, there are standard-setting organizations and regulatory bodies that provide guidelines and enforce compliance.

GAAP and IFRS

Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are two prominent sets of accounting standards, aimed at enhancing consistency and comparability of financial statements.

• GAAP : Predominantly used in the United States, GAAP is a collection of guidelines and rules issued by the Financial Accounting Standards Board (FASB). It covers multiple aspects of financial reporting, from revenue recognition to asset valuation.
• IFRS : Developed by the International Accounting Standards Board (IASB), IFRS is a set of principles that provide a global framework for preparing and presenting financial statements. It is applicable in more than 100 countries and focuses on principles-based accounting, allowing for greater flexibility in applying accounting policies.

One key distinction between GAAP and IFRS is their methodology:

Both systems aim to enhance financial statement analysis by promoting transparency and consistency.

SEC Regulations and Compliance

For public companies, regulatory bodies such as the Securities and Exchange Commission (SEC) in the United States oversee compliance with accounting standards and financial reporting requirements. The SEC mandates that publicly-traded companies adhere to GAAP when preparing their financial statements.

SEC regulations dictate various reporting aspects, including:

• Filing of periodic financial reports
• Ensuring timely disclosure of material information
• Upholding accuracy and integrity in financial reporting
• Imposing penalties for non-compliance

In essence, the role of standards and regulations is to safeguard the interests of financial statement users by establishing a robust framework for financial accounting and reporting. GAAP, IFRS, and SEC regulations collectively contribute to transparent, reliable, and comparable financial information, promoting better decision-making among investors and other stakeholders.

Advanced Financial Statement Concepts

Earnings and dividends.

Earnings per share (EPS) is a crucial financial metric in determining a company’s profitability. It represents the portion of a company’s profit allocated to each outstanding share of common stock. To calculate EPS, divide the net income by the weighted average number of outstanding shares.

Comprehensive income encompasses all components of income and changes in equity other than transactions with stockholders, such as net income and other comprehensive income. It gives a holistic view of an organization’s financial performance.

Dividends are payments made by a corporation to its shareholders, usually from its net profits. Dividends can be in the form of cash, stock, or other assets. Retained earnings are the portion of net income that is retained by the company rather than being distributed as dividends. They are used for reinvestment in the company or to pay off debt.

Financial statements, such as income statements and cash flow statements , help analyze a company’s earnings and dividends. The income statement presents the company’s revenues, expenses, and profits, while the cash flow statement provides information about cash inflows and outflows.

Amortization and Depreciation

Both amortization and depreciation are accounting methods used to allocate the cost of an asset over its useful life. However, they apply to different types of assets.

Amortization applies to intangible assets, such as patents, trademarks, or licenses. It is the systematic allocation of an intangible asset’s cost over its useful life.

Depreciation applies to tangible assets, such as buildings, machinery, and equipment. It is the systematic allocation of a tangible asset’s cost over its useful life. Depreciation helps account for the wear and tear of assets over time.

The following table shows the key differences between amortization and depreciation:

Both amortization and depreciation are important concepts in financial statements, specifically in the income statement and the cash flow statement. They also influence the statement of changes in equity , which presents the equity changes resulting from transactions with owners and other comprehensive income.

Financial Statements in Decision Making

Investors and stakeholders.

Financial statements play a crucial role in decision-making for investors and stakeholders. These documents provide insight into a company’s financial health, allowing interested parties to assess the business’s value, creditworthiness, and potential risks. The main financial statements that are essential in decision-making are the balance sheet, income statement, and the cash flow statement.

• The balance sheet offers a snapshot of the company’s assets, liabilities, and equity at a specific point in time.
• The income statement displays the company’s net earnings or losses within a specified period. It is a valuable tool for calculating the profit margin and analyzing overall revenue and expenses.
• The cash flow statement outlines the cash inflows and outflows, enabling stakeholders to understand how the company manages its cash and assess its liquidity position.

These financial statements are particularly significant for external stakeholders, such as investors, who rely on this information to make informed decisions about the company’s potential for growth and profitability. The analysis of annual financial statements can indicate trends, helping stakeholders project future performance and calculate the present value of potential investments.

Risk and Return Analysis

A proper analysis of financial statements enables stakeholders to evaluate the associated risks and returns of the business. By examining various financial ratios and metrics, investors can determine the stability of the company and its ability to generate returns on their investments. Some essential metrics usually considered are:

• Debt-to-Equity Ratio : Indicates the proportion of debt in the company’s capital structure; a higher ratio can signify higher risks.
• Current Ratio : Measures liquidity by comparing a company’s current assets to its current liabilities. A ratio greater than 1 suggests that the company can meet its short-term obligations.
• Return on Equity : Represents the financial performance of the company, revealing how effectively the company generates profit from its shareholders’ investments.

Through a comprehensive analysis of financial statements, investors and stakeholders can identify the potential risks and make informed decisions regarding their involvement with the company. Ultimately, these documents serve as crucial tools for assessing the performance, stability, and growth potential of a business, aiding in effective decision-making for those seeking to invest or deepen their involvement with an organization.

Frequently Asked Questions

What are the major components included in a complete set of financial statements.

A complete set of financial statements includes an income statement, a balance sheet, a statement of cash flows, and a statement of retained earnings or equity. Additionally, accompanying footnotes provide essential contextual information and explain the basis of presentation and accounting policies.

How do the different types of financial statements serve various stakeholders?

Different stakeholders, such as investors, creditors, management, and regulatory authorities, rely on financial statements to assess the financial health of a company. These statements provide insights into a company’s profitability, liquidity, solvency, and overall financial position, enabling stakeholders to make informed decisions about investing in or lending to the company.

Can you describe the key differences between income statements, balance sheets, and cash flow statements?

An income statement summarizes a company’s revenues, expenses, and net income (or loss) for a specific period. It demonstrates the company’s profitability and operational efficiency.

A balance sheet presents a company’s assets, liabilities, and shareholders’ equity at a specific point in time. It provides a snapshot of a company’s financial position and reveals its liquidity and solvency.

A cash flow statement outlines the cash inflows and outflows resulting from operating, investing, and financing activities during a particular period. This statement helps stakeholders assess a company’s ability to generate cash and meet its financial obligations.

What role do financial statements play in business decision-making and investor evaluations?

Financial statements serve as a fundamental tool in business decision-making and investor evaluations. They help management identify trends, assess profitability, and make informed strategic decisions, such as investments or cost-cutting measures. Investors use these statements to analyze a company’s financial performance, compare it with competitors, and determine its attractiveness as an investment opportunity.

Why is financial statement analysis important for investors and creditors?

Financial statement analysis is critical for investors and creditors because it helps them assess a company’s financial health, future prospects, and potential risks. By using techniques such as ratio analysis, trend analysis, and common size analysis, they can evaluate a company’s liquidity, solvency, profitability, and efficiency, which are essential factors in making investment and lending decisions.

How do financial statements reflect a company’s financial health and performance over a given period?

Financial statements provide a comprehensive assessment of a company’s financial health and performance by quantifying its financial activities during a specified period. They highlight trends in revenue growth, profitability, asset utilization, and cash generation, enabling stakeholders to gain a clear understanding of the company’s financial standing and its ability to meet short- and long-term obligations. The periodic nature of these statements allows stakeholders to monitor a company’s progress over time and make well-informed decisions accordingly.

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• 1. Financial Statement = Scorecard

2. Financial Statements to Use

• 3. What's Behind the Numbers?

4. Diversity of Reporting

5. understanding financial jargon.

• 6. Accounting: Art, Not Science

7. Key Accounting Conventions

8. non-financial information, 9. financial ratios and indicators, 10. notes to financial statements, 11. the annual report/10-k, 12. consolidated statements, why are financial statements important, what key financial statements should i understand when analyzing a company, what’s the difference between gaap and ifrs accounting conventions, what are some key limitations of using financial statements, the bottom line.

• Investing Basics

12 Things You Need to Know About Financial Statements

Quick tips to help you master the art of reading a financial statement

Knowing how to work with the numbers in a company's financial statements is an essential skill for stock investors. The meaningful interpretation and analysis of balance sheets , income statements, and cash flow statements to discern a company's investment qualities is the basis for smart investment choices.

However, the diversity of financial reporting requires that we first become familiar with certain financial statement characteristics before focusing on individual corporate financials. In this article, we'll show you what the financial statements have to offer and how to use them to your advantage.

Key Takeaways

• Understanding how to read a company's financial statements is a key skill for any investor wanting to make smart investment choices.
• There are four sections to a company's financial statements: the balance sheet, the income statement, the cash flow statement, and the explanatory notes.
• Prudent investors might also want to review a company's 10-K, which is the detailed financial report the company files with the U.S. Securities and Exchange Commission (SEC).
• An investor should also review non-financial information that could impact a company's return, such as the state of the economy, the quality of the company's management, and the company's competitors.

1. Financial Statement = Scorecard

There are millions of individual investors worldwide, and while a large percentage of these investors have chosen mutual funds as the vehicle of choice for their investing activities, many others are also investing directly in stocks. Prudent investing practices dictate that we seek out quality companies with strong balance sheets, solid earnings , and positive cash flows .

Whether you're a do-it-yourself investor or rely on guidance from an investment professional, learning certain fundamental financial statement analysis skills can be very useful. Almost 30 years ago, businessman Robert Follett wrote a book entitled How To Keep Score In Business . His principal point was that in business you keep score with dollars, and the scorecard is a financial statement. He recognized that "a lot of people don't understand keeping score in business. They get mixed up about profits, assets , cash flow, and return on investment ."

The same thing could be said today about a large portion of the investing public, especially when it comes to identifying investment values in financial statements. But don't let this intimidate you; it can be done.

The financial statements used in investment analysis are the balance sheet, the income statement , and the cash flow statement with additional analysis of a company's  shareholders' equity and retained earnings . Although the income statement and the balance sheet typically receive the majority of the attention from investors and analysts, it's important to include in your analysis the often overlooked cash flow statement.

3. What's Behind the Numbers?

The numbers in a company's financial statements reflect the company's business, products, services, and macro-fundamental events. These numbers and the financial ratios or indicators derived from them are easier to understand if you can visualize the underlying realities of the fundamentals driving the  quantitative information. For example, before you start crunching numbers, it's critical to develop an understanding of what the company does, its products and/or services, and the industry in which it operates.

Don't expect financial statements to fit into a single mold. Many articles and books on financial statement analysis take a one-size-fits-all approach. Less-experienced investors might get lost when they encounter a presentation of accounts that falls outside the mainstream of a so-called "typical" company. Please remember that the diverse nature of business activities results in a diverse set of financial statement presentations. This is particularly true of the balance sheet; the income statement and cash flow statement are less susceptible to this phenomenon.

The lack of any appreciable standardization of financial reporting terminology complicates the understanding of many financial statement account entries. This circumstance can be confusing for the beginning investor. There's little hope that things will change on this issue in the foreseeable future, but a good financial dictionary can help considerably.

Investopedia's Glossary of Terms provides you with thousands of definitions and detailed explanations to help you understand terms related to finance, investing, and economics.

6. Accounting: Art, Not Science

The presentation of a company's financial position, as portrayed in its financial statements, is influenced by management's estimates and judgments. In the best of circumstances, management is scrupulously honest and candid, while the outside auditors are demanding, strict, and uncompromising. Whatever the case, the imprecision that can be inherently found in the accounting process means that the prudent investor should take an inquiring and skeptical approach toward financial statement analysis . 

Generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) are used to prepare financial statements. Both methods are legal in the United States, although GAAP is most commonly used. The main difference between the two methods is that GAAP is more "rules-based," while IFRS is more "principles-based." Both have different ways of reporting asset values, depreciation, and inventory, to name a few.

Information on the state of the economy, the industry, competitive considerations, market forces, technological change, the quality of management and the workforce are not directly reflected in a company's financial statements. Investors need to recognize that financial statement insights are but one piece, albeit an important one, of the larger investment puzzle.

The absolute numbers in financial statements are of little value for investment analysis unless these numbers are transformed into meaningful relationships to judge a company's financial performance and gauge its financial health. The resulting ratios and indicators must be viewed over extended periods to spot trends. Please beware that evaluative financial metrics can differ significantly by industry, company size, and stage of development.

The financial statement numbers don't provide all of the disclosure required by regulatory authorities. Analysts and investors alike universally agree that a thorough understanding of the notes to financial statements is essential to properly evaluate a company's financial condition and performance. As noted by auditors on financial statements "the accompanying notes are an integral part of these financial statements." Please include a thorough review of the noted comments in your investment analysis.

Prudent investors should only consider investing in companies with audited financial statements, which are a requirement for all publicly-traded companies. Perhaps even before digging into a company's financials, an investor should look at the company's annual report  and the 10-K . Much of the annual report is based on the 10-K, but contains less information and is presented in a marketable document intended for an audience of shareholders. The 10-K is reported directly to the U.S. Securities and Exchange Commission or SEC and tends to contain more details than other reports.

Included in the annual report is the  auditor's report , which gives an auditor's opinion on how the accounting principles have been applied. A "clean opinion" provides you with a green light to proceed. Qualifying remarks may be benign or serious; in the case of the latter, you may not want to proceed.

Typically, the word "consolidated" appears in the title of a financial statement, as in a consolidated balance sheet . A consolidation of a parent company and its majority-owned (more than 50% ownership or "effective control") subsidiaries means that the combined activities of separate legal entities are expressed as one economic unit. The presumption is that consolidation as one entity is more meaningful than separate statements for different entities.

Financial statements provide investors with information about a company's financial position, helping to ensure corporate transparency and accountability. Understanding how to interpret key financial reports, such as a balance sheet and cash flow statement, helps investors assess a company’s financial health before making an investment. Investors can also use information disclosed in the financial statements to calculate ratios for making comparisons against previous periods and competitors.

Investors should start by learning how to interpret key figures on a company's balance sheet, income statement, and statement of cash flows. Those wanting to dig a little deeper may want to consider learning how to analyze reports, such as shareholder’s equity and retained earnings. Investors can find a publicly traded company’s financial statements in its annual report or a 10-K filed with the SEC.  

GAAP sets accounting guidelines and standards that companies must follow when preparing financial statements, whereas IFRS takes a more principles-based approach. Both conventions differ in how they report asset values, depreciation, and inventory. GAAP typically requires more disclosures than IFRS, with the latter providing much less overall detail. Both accounting methods are legal in the United States.

Financial statements only provide a snapshot of a company's financial situation at a specific point in time. They also don't consider non-financial information, such as the health of the broader economy, and other factors, such as income inequality or environmental sustainability . Forward-looking financial statements rely on estimates and assumptions, which may not always be accurate and are subject to change.

Understanding the basics of financial statements provides investors with valuable information about a company's financial health. Investors can use key reports, such as a balance sheet, cash flow statement, and income statement, to evaluate a company's performance, helping to make more informed investment decisions. However, it’s also important to understand the limitations of overly relying on financial statements and consider other metrics, such as the impact of non-financial information, when analyzing a company's overall financial position. Financial statements play a vital role in maintaining the integrity of the financial system and promoting trust between companies and investors.

Robert Fullet. " How to Keep Score in Business ," Page 2. FT Press, 2012.

Financial Accounting Standards Board. " Comparability in International Accounting Standards—A Brief History ."

U.S. Securities and Exchange Commission. " Form 10-K ."

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Home Blog PowerPoint Tutorials How To Create a PowerPoint Presentation of Financial Statements

How To Create a PowerPoint Presentation of Financial Statements

At SlideModel.com we receive several help requests from our users regarding Financial Analysis PowerPoint Presentations, mainly the presentation of Financial Statements data. We have previously wrote about this topic in our post  Financial Statement Templates For PowerPoint Presentations  with the objective to help users summarize relevant data and communicate the important conclusion extracted from the statements. The feedback was positive, but we are still requested to provide some guidelines on detailed statements. For this reason we will walk through our   Financial Statements PowerPoint Template  which provides comprehensive tables that provide higher level of detail. In order to have a higher visual impact and allow the message to engage the audience, the template also provides charts and ratios dashboards that will appeal to executive audiences.

• Financial data is complex
• Concepts are not intuitive
• The understanding and frame of references varies depending the audience.

This facts will drive your consolidated financial statements presentation plan.

The following sections will walk through financial statement presentation examples and will provide insights on how to tackle them.

Balance Sheet

The balance sheet by definition is a financial statement that summarizes an organization assets, liabilities and equity at a specific point of time (a snapshot). This three concepts provide information on what the organization owns, owes and how much was invested (capital).  Applying the facts we described before, Balance Sheet data is complex, so you will try to summarize the data in each section as much as possible, presenting the relevant accounting lines (generally, those associated with Liquidity , Debt and Net Worth ). The Concepts ( Assets , Liabilities and Equity ) are not simple, and when you dive into “liquidity of them”, it starts getting harder. The audience will drive your level of detail, so present a table where the major concepts are clearly highlighted (background colors), with totalizers (use bold for this lines and make sure you point them strongly). Move quickly to the Ratios section if understood, otherwise navigate to a second level of detail, if the audience requests to drill down.

As shown by the orange arrows in the image, the important concepts are highlighted. Again, what will remain in the audience mind is that “you can explain detail if requested”, “you can show the consolidated numbers” and that “you can move to the important topics derived in the relationships of Financial Statements”, the Ratios .

Income Statement

The Income Statement, also known as  “Statement of Incomes” , “Profit & Loss” or just “P&L”, is a financial statement that presents financial performance of an organization over a time period. How does it measures performance ? , summarizing how revenues occur and how expenses were incurred for all the organization activities (operational and non-operational). Also , shows the Net Profit (positive or negative) over the period.

This statement if divided into two sections, operational and non-operational. Operational items are directly related with the organizations core activities in Sales and Cost of Sale. Non Operational Items are expenses the company incurs for administrative , managerial or assets exchange activities.

Differently from the Balance Sheet, the Income Statement represents a period of time and not a snapshot.

When creating an Income Statement Presentation, take into account that what the audience is looking for is How the organization is performing?.  Generally, to show performance, you will need to compare against other period or a benchmark, for that reason each column is a “challenger” for the actual period column. Even though the absolute numbers are important you will need to communicate  the Trend concluded against the original and challengers statements. Highlight the Revenues and the Cost of Sales . Present them in an individual Slide as the “ Operational ” Section of the statement.

The second section of the Income Statement , is the Non-Operational Items, generally called “expenses”. This section shows how the organization management is using money for non operational activities. This section is important when the analysis is centered in improving efficiency. The amount of non-operational items can be huge, so its important you can consolidate into categories. Take your time to exercise this suggestion, otherwise the list will be too long, and will dis-encourage the audience. As a suggestion, keep in mind that this line items are industry dependent. Analyze some examples in your industry to come up with meaningful consolidated categories.

Statement Of Cash Flows

The Statement Of Cash Flows, by definition, is the financial statement that presents all the cash inflows and outflows derived of the operating, financing and investing activities of the organization in a period of time. This financial statement is created by 2 widely used methods, the direct and indirect methods. The main difference is that the direct method uses cashflow records to create the operational items while the indirect method uses  accrual accounting information to present the cash flows from the operations section, deriving them from the net income .Considering that the indirect method is the most popular, we included its table in the template.

This statement must communicate the cash flows through the organization activities and their accounting recognitions. The analysis generally will focus on the sustainability of the operational section, and how much investment and financing is required at the period to keep the business going. If contracts are being recognized as revenue in a period but money is not really reaching the organization, the statement of cashflows will spot this problem and will help managers to take actions over it. With the same reasoning, if net income allows higher cash flow bandwidth in operations, the organization could use fund for repaying debt and diminish the cost of financing.

The Statement of Cash Flows is divided in the three sections mentioned, Operational , Financing and Investing activities. In this template we created one slide for Operations and Finance, a second slide for Investing and a third slide with the subtotals of each activity, showing the total cash flows.

Presenting Trends

As we mentioned before, the important message that need to be presented with the financial statement  is the organizations performance. The best tools for communicating trends, are the charts. In this case the Financial Statements PowerPoint Template Provides three editable examples. We will show how the presenter can edit the charts and present meaningful information derived from the statements.

Income and Expenses Barchart

When reviewing the Income Statement , we explained the importance of the Operational Data versus Non-Operational . The Income and Expenses Chart visually communicate the relationship between this activities and allows the audience to review the trend or evolution, period versus period. This is ideal for spoting efficiency opportunities. The chart has two veritcal axis. The left (or main) axis represents the Operational Income and Net Income. The right axis (or secondary Axis) represents the Sales, Cost of Sales and Expenses. Remember the simple algebra that relates this value:

• Operational Income = Sales – Cost of Sales
• Net Income = Sales – Cost of Sales – Expenses

This example shows that the Net Income increases with time at a higher rate than the operational income. This can be interpreted as that sales improved, and expenses were kept almost similar. This kind of information is the message the presenter need to communicate, and the use of chart will boost the audience retention of the idea.

The chart is created as a PowerPoint chart, so the user will be able to edit it though the “ Edit Data ” Option of the “ Chart Tools > Design ” menu.

Income and Expenses Pie Chart

The other Chart Tool included in the Financial Statement PowerPoint Template is the Discrimination in Revenues and Expenses. This Charts help to transmit the message of revenues streams and expenses items. Ideal to communicate which are the business lines that bring higher revenues to the organization and which are the items were most of the money is being spent. Again, this chart will allow to spot efficiency problems, prioritize business units or cut costs.

Operating Income & Margin

One of the most extensively used key performance indicators in financial statement is the Operating Margin. This indicator derived from the operating revenues and operating costs allows to compare efficiency on the performance of the value proposition delivery. The trends over the operating margin can show problems in costs or problems on value proposition delivery that derive in a lower return. Again, in the sake of providing comparable features, the chart presented uses two vertical axis (primary and secondary). The primary axis (left) represents the Operating Income. The secondary axis (right) represents the Operating Margin. The chart is Data Driven, and editable through Excel.

Financial Statement Ratios

In this section we will show the most popular ratios used in conjunction with the Financial Statements. Following the initial note idea, the aim of the financial statements presentation should not be to repeat numbers and lists, but to communicate conclusions of the information hidden behind them . With this objective in mind is that executives decided to move into ratio analysis instead of financial statements analysis, basically because a summarized indicator ( KPI ) that relates specific data, provides enough information for decision making process, without the need of extensive analysis.

Liquidity Ratios

The liquidity ratios,by definition, are key performance indicators of the organization  to determine  it’s ability to pay off its short-terms debts obligations. They are created with information derived from the Balance Sheet (so they represent a snapshot). In the Financial Statement PowerPoint Template we created gauges indicators with categories from Best to Worse. The presentar can edit and manipulate this shapes as the are 100% fully editable . The indicators selected are:

• Current Ratio : also known as Working Capital Position.
• Quick Ratio : also known as Acid Test Ratio
• Net Working Capital Ratio

Profitability Ratios

Organizations Financial Performance can be interpreted from different angles, some times, growth is more importante than being “more” profitable, but almost all the times executives need to compare profitability between periods, to understand the impact of strategic decisions over the amount of money left for the organization and stakeholders.

For this ratios we prepared an alternative Gauge design,  modern and without classification over the values.

The ratios presented are:

• Return on Assets (ROA)
• Return on Equity (ROE)
• Profit Margin

Capital Structure Ratios

The Capital Structure  is how an organization finances its overall operations and growth by using different sources of funds. The Ratios on this sections allows the presenter to communicate this relationships. In this case instead of gauge like indicators, we used Editable Donut Charts.

• Assets Turnover Ratio
• Accounts Receivable Turnover Ratio
• Inventories Turnover Ratio

Debt Equity Ratios

The debt equity ratios show how the organization uses debt and equity to finace assets and operations.

• Debt to Equity Ratio
• Interest Coverage Ratio

Creating Consolidated Financial Statements PowerPoint Presentations can be a tough job. The presenter needs to evaluate the complexity of the data, the depth to be shown and the audience that will assist the presentation. Tools like charts and dashboard will help the presenter to summarize relevant information and communicate quicker, the important facts. The use of Financial Ratios is fundamental for a successful message.

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Analysis of Financial Statements

Published by Noah Kerr Modified over 10 years ago

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ACCOUNTING Financial and Organisational Decision Making

Accounting for Corporations

Copyright © 2012 The McGraw-Hill Companies, Inc. PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker,

The Income Statement, Comprehensive Income, and the Statement of Cash Flows Chapter 4 Chapter 4: The Income Statement, Comprehensive Income, and the.

CHAPTER 5 ESSENTIALS OF FINANCIAL STATEMENT ANALYSIS.

Reporting and Interpreting Cost of Goods Sold and Inventory

Chapter 4: Financial Statement Analysis

Reporting and Analyzing Cash Flows

Copyright © 2008, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Chapter Fifteen “How Well Am I Doing?” Statement of Cash Flows.

Analyzing Financial Statements

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright.

“How Well Am I Doing?” Financial Statement Analysis

PowerPoint Authors: Jon A. Booker, Ph.D., CPA, CIA Charles W. Caldwell, D.B.A., CMA Susan Coomer Galbreath, Ph.D., CPA Copyright © 2010 by The McGraw-Hill.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Chapter Fourteen: Financial Statement Analysis.

1 © Copyrright Doug Hillman 2000 Analysis and Interpretation of Financial Statements.

Chapter Thirteen Financial Statement Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

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ANALYSIS OF FINANCIAL STATEMENTS

Sep 16, 2014

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ANALYSIS OF FINANCIAL STATEMENTS. DEFINITION. FINANCIAL STATEMENT :- “AN ORGANISED COLLECTION OF DATA ACCORDING TO LOGICAL AND CONSISTENT ACCOUNTING PROCEDURES”. TYPES. FINANCIAL STATEMENT. STATEMENT OF CHANGES IN FINANCIAL POSITION. INCOME STATEMENT (P&L A/C). STATEMENT

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DEFINITION • FINANCIAL STATEMENT :- “AN ORGANISED COLLECTION OF DATA ACCORDING TO LOGICAL AND CONSISTENT ACCOUNTING PROCEDURES”

TYPES FINANCIAL STATEMENT STATEMENT OF CHANGES IN FINANCIAL POSITION INCOME STATEMENT (P&L A/C) STATEMENT OF RETAINED EARNINGS (P&L APPROPRIATION) BALANCE SHEET A FLOW REPORT FINANCIAL POSITION AS ON DATE CHANGING WORKING CAPITAL (FUND FLOW) CHANGE IN CASH POSITION (CASH FLOW) CHANGES IN FINANCIAL POSITION)

FACTORS • FINANCIAL STATEMENTS ARE INDICATORS OF TWO SIGNIFICANT FACTORS :- • PROFITABILITY. • FINANCIAL SOUNDNESS.

DEFINITION • ANALYSIS & INTERPRETATION :- “SUCH TREATMENT OF THE INFO CONTAINED IN THE INCOME STATEMENT AND BALANCE SHEET SO AS TO AFFORD FULL DIAGNOSIS OF THE PROFITABILITY AND FINANCIAL SOUNDNESS OF THE BUSINESS”.

ANALYSIS ANDINTERPRETATION • ANALYSIS :- • METHODICAL CLASSIFICATION :- PUT IN A SIMPLIFIED FORM. • INTERPRETATION :- • EXPLAIN MEANING & SIGNIFICANCE OF THE ANALYSED DATA. • INTERPRETATION REQUIRES ANALYSIS. • ANALYSIS WITHOUT INTERPRETATION • IS MEANINGLESS.

TYPES ANALYSIS MODUS OPRANDI MATERIAL USED VERTICAL * VARIOUS ITEMS IN THE FIN STATS (STATIC) HORIZONTAL * No OF YEARS (DYNAMIC) EXTERNAL BY OUTSIDERS BALANCE SHEETS INTERNAL BY EXECUTIVES/EMPLOYEES BOOKS OF ACCOUNTS * CAN BE DONE SIMULTANEOUSLY

STEPS IN ANALYSIS • METHODICAL CLASSIFICATION (LIQUID ASSETS, CURRENT ASSETS, CURRENT LIABILITIES, PROVISIONS & NET WORKING CAPITALS).

TECHNIQUES OF FINANCIAL ANALYSIS • COMPARATIVE FINANCIAL STATEMENTS. • COMMON SIZE FINANCIAL STATEMENTS. • TREND PERCENTAGES. • FUND FLOW ANALYSIS. • CASH FLOW ANALYSIS. • COST - VOLUME - PROFIT (CVP) ANALYSIS. • RATIO ANALYSIS.

TECHNIQUES OF FINANCIAL ANALYSIS • COMPARATIVE FINANCIAL STATEMENTS :- • FIGURES OF TWO OR MORE PERIODS ARE PLACED SIDE BY SIDE. (COMPARATIVE INCOME STATEMENTS ; COMPARATIVE BALANCE SHEET). • ABSOLUTE INCREASE ; PERCENTAGEINCREASE.

TECHNIQUES OF FINANCIAL ANALYSIS • COMMON SIZE FINANCIALSTATEMENTS :- • “FIGURES ARE CONVERTED TO PERCENTAGES TO SOME COMMON BASE ”.

TECHNIQUES OF FINANCIAL ANALYSIS • TREND PERCENTAGE :- “CALCULATES % AGE RELATIONSHIP THAT EACH ITEM BEARS TO THE SAME ITEM IN THE BASE YEAR. THE BASE YEAR SHOULD BE A NORMAL YEAR. ITEMS HAVING LOGICAL RELATIONSHIP ONLY SHOULD BE COMPARED. ABSOLUTE FIGURES MUST BE CONSIDERED SINCE %AGE MAY BE MISLEADING”.

TECHNIQUES OF FINANCIAL ANALYSIS • FUND FLOW ANALYSIS :- “REVEALS THE CHANGES IN WORKING CAPITAL POSITION. TELLS ABOUT THE SOURCES FROM WHICH WORKING CAPITAL WAS OBTAINED AND THE PURPOSES FOR WHICH IT WAS USED”.

TECHNIQUES OF FINANCIAL ANALYSIS • COST-VOLUME-PROFIT ANALYSIS :- “TOOL OF PROFIT PLANNING. STRICTLY SPEAKING IT IS NOT A TOOL OF ANALYSIS OF FINANCIAL STATEMENTS. DATA IS PROVIDED BOTH BY COST AND FINANCIAL RECORDS”.

TECHNIQUES OF FINANCIAL ANALYSIS • RATIO ANALYSIS :- “MOST IMPORTANT TOOL AVAILABLE. AN ACCOUNTING RATIO SHOWS THE RELATIONSHIP IN MATHEMATICAL TERMS BETWEEN TWO INTER-RELATED ACCOUNTING FIGURES”.

LIMITATIONS • FINANCIAL ANALYSIS IS ONLY A MEANS NOT THE END. • PREPARED ON THE CONCEPT OF HISTORICAL COSTS NOT CURRENT COST. • DISCLOSES ONLY MONETARY FACTS. • INFLUENCE OF PERSONNEL JUDGEMENT/PREJUDICES. • SUBJECTIVE ACCOUNTING CONCEPTS.

COMPARATIVE FINANCIAL STATEMENTS • COMPARATIVE INCOME STATEMENT (P&L A/Cs) :- • SHOWS ABSOLUTE FIGURES FOR TWO OR MORE PERIODS, THE ABSOLUTE CHANGE OVER THE PERIOD AND CHANGE IN TERMS OF PERCENTAGES.

COMPARATIVE FINANCIAL STATEMENTS • COMPARATIVE BALANCE SHEET :- • AS ON TWO OR MORE DATES TO COMPARE ASSETS & LIABILITIES AND DETERMINE CHANGES OR TRENDS. • USEFUL TO STUDY TRENDS IN AN ENTERPRISES (NPF).

COMPARATIVE FINANCIAL STATEMENTS • COMMON - SIZE FINANCIAL STATEMENTS :- • ALL THE ABSOLUTE FIGURES ARE CONVERTED INTO %AGES TO COMMON BASE. FOR EXAMPLE AS A %AGE OF SALES (BASE 100). • THIS SHOWN THE %AGE OF EACH ITEM TO THE TOTAL IN EACH PERIOD BUT NOT THE VARIATIONS FROM PERIOD TO PERIOD. • USEFUL FOR COMPARING TWO SIMILAR COMPANIES/BUSINESS/NPFs.

COMPARATIVE FINANCIAL STATEMENTS • TREND PERCENTAGES :- • INVOLVES CALCULATION OF %AGE RELATIONSHIP THAT EACH ITEM BEARS TO THE SAME ITEM IN THE BASE YEAR (USUALLY THE EARLIEST YEAR) TAKEN AS 100. • HELPS COMPARATIVE STUDY OF FINANCIAL STATEMENTS FOR SEVERAL YEARS. • USUALLY CALCULATED FOR MAJOR ITEMS AND NOT ALL ITEMS OF THE FINANCIAL STATEMENTS.

COMPARATIVE FINANCIAL STATEMENTS • TREND PERCENTAGES (Cont’d) :- • CARE SHOULD BE TAKEN WITH REGARD TO THE FOLLOWING :- • ACCTG PRINCIPLES. & PRACTICES IS CONSTANT OVER THE ENTIRE PERIOD. • NOT TO BE USED FOR ITEMS NOT HAVING LOGICAL RELATIONSHIP WITH ONE ANOTHER. • ABSOLUTE FIGURES MUST ALSO BE GIVEN DUE CONSIDERATION. • INFLATION AND OTHER CHANGES NEED TO BE FEATURED.

RATIO ANALYSIS • DEFINITION :- • “ ONE OF THE TECHNIQUES OF FINANCIAL ANALYSIS WHERE ARE USED AS A YARDSTICK FOR EVALUATING THEFIANANCIAL CONDITION AND PERFORMANCE OF A FIRM”

RATIO ANALYSIS • TYPES :- • RATIOS CAN BE EXPRESSED IN 2 WAYS :- • (a) TIMES = ONE VALUE IS DIVIDED • BY ANOTHER. • (b)PERCENTAGE = THE ‘TIMES’ QUOTIENT • IS MULTIPLIED BY 100

RATIO ANALYSIS • CLASSIFICATION OF ACCTG RATIOS :- • ON THE BASIS OF THE FINANCIAL STATEMENTS TO WHICH THE DETERMINANTS OF A RATIO BELONGS (TRADITIONAL). • P & L A/C RATIOS (FOR EXAMPLE - STOCK TURNOVER RATIO). • BALANCE SHEET RATIOS (FOR EXAMPLE -DEBIT EQUITY RATIO). • INTER STATEMENT (COMPOSITE) RATIOS ( FOR EXAMPLE - FIXED ASSET TURNOVER RATIO).

RATIO ANALYSIS • CLASSIFICATION OF ACCTG RATIOS (Cont’d) :- • FUNCTIONAL (TO STUDY THE PFOFITABILITY AND SOLVENCY). • PROFITABILITY RATIO (ROLE-RETURN ON CAPITAL EMPLOYED). OP PROFITX 100 CAPITAL EMPLOYED • COVERAGE RATIO. • TURNOVER RATIO. • FINANCIAL RATIOS. LIABILITY RATIO STABILITY RATIO

RATIO ANALYSIS • PROFITABILITY :- “IS AN INDICATION OF THE EFFICIENCY WITH WHICH THE OP OF THE BUSINESS IS CARRIED ON”

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Standards for Integrity and Independence in Accredited Continuing Education

About the standards.

The Standards for Integrity and Independence in Accredited Continuing Education are designed to:

• Ensure that accredited continuing education serves the needs of patients and the public
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Investor News Details

Nike, inc. reports fiscal 2024 fourth quarter and full year results.

BEAVERTON, Ore.--(BUSINESS WIRE)-- NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2024 fourth quarter and full year ended May 31, 2024.

• Full year revenues were $51.4 billion compared to $51.2 billion in the prior year, up 1 percent on a currency-neutral basis*
• Fourth quarter revenues were $12.6 billion, down 2 percent on a reported basis and flat on a currency-neutral basis
• NIKE Direct revenues for the fourth quarter were $5.1 billion, down 8 percent on a reported basis and down 7 percent on a currency-neutral basis
• Wholesale revenues for the fourth quarter were $7.1 billion, up 5 percent on a reported basis and up 8 percent on a currency-neutral basis
• Gross margin for the fourth quarter increased 110 basis points to 44.7 percent
• Diluted earnings per share was $0.99 for the fourth quarter

"We are taking our near-term challenges head-on, while making continued progress in the areas that matter most to NIKE's future – serving the athlete through performance innovation, moving at the pace of the consumer and growing the complete marketplace," said John Donahoe, President & CEO, NIKE, Inc. "I'm confident that our teams are lining up our competitive advantages to create greater impact for our business."**

Matthew Friend, Executive Vice President & Chief Financial Officer, NIKE, Inc. said, "We are driving better balance across our portfolio. While we are encouraged by our progress, our fourth quarter results highlighted challenges that have led us to update our Fiscal '25 outlook. We are taking actions to reposition NIKE to be more competitive, and to drive sustainable, profitable long-term growth."**

Fourth Quarter Income Statement Review

• Revenues for the NIKE Brand were $12.1 billion, down 1 percent on a reported basis and up 1 percent on a currency-neutral basis, with currency-neutral growth in Greater China, APLA and EMEA, partially offset by a decline in North America.
• NIKE Direct revenues were $5.1 billion, down 8 percent on a reported basis and down 7 percent on a currency-neutral basis, due to declines in NIKE Brand Digital of 10 percent and NIKE-owned stores of 2 percent.
• Wholesale revenues for the fourth quarter were $7.1 billion, up 5 percent on a reported basis and up 8 percent on a currency-neutral basis.
• Revenues for Converse were $480 million, down 18 percent on a reported basis and down 17 percent on a currency-neutral basis, primarily due to declines in North America and Western Europe.
• Gross margin increased 110 basis points to 44.7 percent, primarily due to strategic pricing actions, lower ocean freight rates and logistics costs, and lower warehousing, partially offset by lower margin in NIKE Direct and unfavorable changes in net foreign currency exchange rates.
• Demand creation expense was $1.1 billion, flat compared to prior year as lower sports marketing expense was offset by higher advertising and marketing expense.
• Operating overhead expense decreased 9 percent to $3.0 billion, primarily due to lower wage-related expenses. Included in Operating overhead expense was $39 million of restructuring charges.
• The effective tax rate was 13.1 percent compared to 17.3 percent for the same period last year, due to changes in earnings mix, partially offset by decreased benefits from stock-based compensation.
• Net income was $1.5 billion, up 45 percent, and Diluted earnings per share was $0.99, including $0.02 of restructuring charges, net of tax benefit. Excluding these charges, Diluted earnings per share would have been $1.01*.

Fiscal 2024 Income Statement Review

• Revenues for the NIKE Brand were $49.3 billion, up 1 percent on a reported and currency-neutral basis, with currency-neutral growth in Greater China and APLA, partially offset by a decline in North America.
• NIKE Direct revenues were $21.5 billion, up 1 percent on a reported and currency-neutral basis, led by NIKE-owned stores growth of 6 percent, partially offset by a decline in NIKE Brand Digital of 3 percent.
• Wholesale revenues were $27.8 billion, up 1 percent on a reported basis and up 2 percent on a currency-neutral basis.
• Revenues for Converse were $2.1 billion, down 14 percent on a reported basis and down 15 percent on a currency-neutral basis, primarily due to declines in North America and Western Europe.
• Gross margin increased 110 basis points to 44.6 percent, primarily due to strategic pricing actions and lower ocean freight rates and logistics costs, partially offset by higher product input costs, lower margin in NIKE Direct and unfavorable changes in net foreign currency exchange rates.
• Demand creation expense was $4.3 billion, up 6 percent compared to prior year, reflecting an increase in advertising and marketing expense.
• Operating overhead expense was $12.3 billion, flat compared to prior year as lower wage-related expenses and lower technology spend were offset by restructuring charges.
• The effective tax rate was 14.9 percent, compared to 18.2 percent for the same period last year, due to changes in earnings mix and one-time items including the benefit provided by the delay of the effective date of US foreign tax regulations in the first quarter of fiscal 2024.
• Net income was $5.7 billion, up 12 percent, and Diluted earnings per share was $3.73, including $0.22 of restructuring charges, net of tax benefit. Excluding these charges, Diluted earnings per share would have been $3.95*.

May 31, 2024 Balance Sheet Review

• Inventories for NIKE, Inc. were $7.5 billion, down 11 percent compared to the prior year, reflecting a decrease in units.
• Cash and equivalents and short-term investments were $11.6 billion, up $0.9 billion from last year, as cash generated from operations was partially offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns

NIKE continues to have a strong track record of consistently increasing returns to shareholders, including 22 consecutive years of increasing dividend payouts.

In the fourth quarter, the Company returned approximately $1.6 billion to shareholders, including:

• Dividends of $560 million, up 7 percent from prior year.
• Share repurchases of $1.0 billion, reflecting 11.1 million shares retired as part of the four-year, $18 billion program approved by the Board of Directors in June 2022.

In fiscal 2024, the Company returned approximately $6.4 billion to shareholders, including:

• Dividends of $2.2 billion, up 8 percent from prior year.
• Share repurchases of $4.3 billion, reflecting 41.4 million shares retired as part of the four-year, $18 billion program approved by the Board of Directors in June 2022.

As of May 31, 2024, a total of 84.9 million shares have been repurchased under the current program for a total of approximately $9.1 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on June 27, 2024, to review fiscal fourth quarter and full year results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com . For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, July 11, 2024.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.'s earnings releases and other financial information are available on the Internet at http://investors.nike.com . Individuals can also visit http://news.nike.com and follow @NIKE.

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Investor Contact: Paul Trussell [email protected]

Media Contact: Virginia Rustique-Petteni [email protected]

Source: NIKE, Inc.

Investor Relations

News Details

Johnson & johnson reports q2 2024 results.

• 2024 Second-Quarter reported sales growth of 4.3% to $22.4 Billion with operational growth of 6.6%* and adjusted operational growth of 6.5%*. Adjusted operational growth excluding COVID-19 Vaccine of 7.1%*
• 2024 Second-Quarter Earnings per share (EPS) of $1.93 decreasing by 5.9% due to one-time special charges and adjusted EPS of $2.82 increasing by 10.2%*
• Significant new product pipeline progress including TREMFYA IBD and subcutaneous filings, RYBREVANT subcutaneous filing, and VARIPULSE admIRE data release
• Company increases Full-Year 2024 operational sales 5 guidance to reflect the acquisition of Shockwave Medical
• Company updates Full-Year 2024 adjusted operational EPS guidance to reflect improved performance; costs associated with recent strategic acquisitions more than offset the improvement

NEW BRUNSWICK, N.J.--(BUSINESS WIRE)-- Johnson & Johnson (NYSE: JNJ) today announced results for second-quarter 2024. “Johnson & Johnson's second quarter performance reflects our relentless focus on advancing the next wave of medical innovation and resulted in strong sales and adjusted operational earnings per share growth,” said Joaquin Duato, Chairman and Chief Executive Officer. “With a robust pipeline, upcoming regulatory milestones for RYBREVANT and TREMFYA, the integration of Shockwave, and continued expansion of newly launched products, including ACUVUE OASYS MAX 1-Day contact lenses and our VARIPULSE platform, we have a strong foundation for near and long-term growth.”

Unless otherwise noted, the financial results and earnings guidance included below reflect the continuing operations of Johnson & Johnson.

Overall financial results

Regional sales results

Segment sales results

Second Quarter 2024 segment commentary:

Operational sales* reflected below excludes the impact of translational currency.

Innovative Medicine

Innovative Medicine worldwide operational sales, excluding the COVID-19 Vaccine, grew 8.8%*. Growth was driven by DARZALEX (daratumumab), ERLEADA (apalutamide), and Other Oncology in Oncology, TREMFYA (guselkumab) and STELARA (ustekinumab) in Immunology, and SPRAVATO (esketamine) in Neuroscience. Growth was partially offset by Other Neuroscience. Including the COVID-19 Vaccine, Innovative Medicine worldwide operational sales grew 7.8%*.

MedTech worldwide operational sales grew 4.4%*, with acquisitions and divestitures positively impacting growth by 0.4%. Operational sales growth was driven primarily by electrophysiology products and Abiomed in Cardiovascular, previously referred to as Interventional Solutions, and wound closure products in General Surgery.

Full-year 2024 guidance:

Johnson & Johnson does not provide GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, acquisition-related expenses, and purchase accounting fair value adjustments without unreasonable effort. These items are uncertain, depend on various factors, and could be material to Johnson & Johnson's results computed in accordance with GAAP.

Johnson & Johnson is updating its 2024 guidance, including adjusted operational EPS guidance, to reflect improved performance and the impact for the recent acquisitions of Shockwave Medical, Proteologix, and NM26 Bispecific Antibody.

Other modeling considerations will be provided on the webcast .

Notable announcements in the quarter:

The information contained in this section should be read together with Johnson & Johnson’s other disclosures filed with the Securities and Exchange Commission, including its Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Copies of these filings are available online at www.sec.gov , www.jnj.com or on request from Johnson & Johnson. The reader is also encouraged to review all other news releases and information available in the Investor Relations section of the company’s website at News Releases , as well as Innovative Medicine News Center , MedTech News & Events , www.factsabouttalc.com , and www.LLTManagementInformation.com .

Webcast information:

Johnson & Johnson will conduct a conference call with investors to discuss this earnings release today at 8:30 a.m., Eastern Time. A simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Johnson & Johnson website . A replay and podcast will be available approximately two hours after the live webcast in the Investor Relations section of the company's website at events-and-presentations .

About Johnson & Johnson:

At Johnson & Johnson, we believe health is everything. Our strength in healthcare innovation empowers us to build a world where complex diseases are prevented, treated, and cured, where treatments are smarter and less invasive, and solutions are personal. Through our expertise in Innovative Medicine and MedTech, we are uniquely positioned to innovate across the full spectrum of healthcare solutions today to deliver the breakthroughs of tomorrow, and profoundly impact health for humanity. Learn more at www.jnj.com .

Non-GAAP financial measures:

* “Operational sales growth” excluding the impact of translational currency, “adjusted operational sales growth” excluding the net impact of acquisitions and divestitures and translational currency, as well as “adjusted net earnings”, “adjusted diluted earnings per share” and “adjusted operational diluted earnings per share” excluding after-tax intangible amortization expense and special items, are non-GAAP financial measures and should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Except for guidance measures, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the accompanying financial schedules of the earnings release and the Investor Relations section of the company's website at quarterly results .

Copies of the financial schedules accompanying this earnings release are available on the company’s website at quarterly results . These schedules include supplementary sales data, a condensed consolidated statement of earnings, reconciliations of non-GAAP financial measures, and sales of key products/franchises. Additional information on Johnson & Johnson, including adjusted income before tax by segment, an Innovative Medicine pipeline of selected compounds in late stage development and a copy of today’s earnings call presentation can also be found in the Investor Relations section of the company's website at quarterly results .

Note to investors concerning forward-looking statements:

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things: future operating and financial performance, product development, and market position and business strategy. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to: economic factors, such as interest rate and currency exchange rate fluctuations; competition, including technological advances, new products and patents attained by competitors; challenges inherent in new product research and development, including uncertainty of clinical success and obtaining regulatory approvals; uncertainty of commercial success for new and existing products; challenges to patents; the impact of patent expirations; the ability of the Company to successfully execute strategic plans, including restructuring plans; the impact of business combinations and divestitures; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory action; significant adverse litigation or government action, including related to product liability claims; changes to applicable laws and regulations, including tax laws and global health care reforms; trends toward health care cost containment; changes in behavior and spending patterns of purchasers of health care products and services; financial instability of international economies and legal systems and sovereign risk; increased scrutiny of the health care industry by government agencies; and the Company’s ability to realize the anticipated benefits from the separation of Kenvue Inc. A further list and descriptions of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, including in the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and in Johnson & Johnson’s subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov , www.jnj.com or on request from Johnson & Johnson. Any forward-looking statement made in this release speaks only as of the date of this release. Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments.