Extracts from CeeCee's accounts: Statement of Comprehensive Income, Statement of Financial Position and Statement of Changes in Equity Statement of Comprehensive Income Year ended 31 December 2008 Year ended 31 December 2007 € million € million Sales revenue 2,700 2.084 2,358 Operating costs 1,824 Operating profit Finance costs (net) Tax expense (effective tax rate is 30%) 616 22 178 534 26 152 Profit for the perlod 416 356 Statement of Financial Position As at 31 December 2008 As at 31 December 2007 € million €million € million €milion Non-current assets (net) 1,438 1,363 Current assets Trade receivables Inventory Cash and cash equivalents 286 313 234 174 623 428 Total assets 2,061 1,791 Equity and liabilities Equity Share capital Share premium Retained earnings 50 40 1.038 50 40 830 1,128 920 Non-current liabilities 300 300 Current liabilities Trade payables Таx рayabie 455 419 152 178 633 571 Total equity and liabilitios 2,061 1,791 Note: Paid in share capital represents 100 million shares of €0.50 each at 31 December 2008 Statement of Changes in Equity Share capital premium Share Retained Total earnings € million € millon € million € million Balance at 31 December 2007 Profit for the period Dividends paid 830 416 208 50 40 920 416 208 Balance at 31 December 2008 50 40 1,038 1,128
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Question:
2.EBITDA (Profit before interest and tax/ assets) need interpretation
Earnings before interest, tax,
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