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Budgets & Financial Reports

Welcome to the Understanding Budgets and Financial Reports workshop. Everyday businesses deal with budgets and financial reports in some form or fashion. At minimum, business managers review budget numbers and run financial reports for decision making and reporting to shareholders and Federal regulators once a month. Many companies devote the last few months of the calendar year to creating budgets for the next calendar year. In addition, organizations create and disseminate year-end financial reports to investors. Click Here To Learn More!
The goal of this is to give the participant a basic understanding of budgets and financial reports so they can hold relevant discussions and render decisions based on financial data. This course will define key terms like ROI, EBIT, GAAP, and extrapolation. Furthermore, this one-day course will discuss commonly used financial terms, financial statements, budgets, forecasting, purchasing decisions, and laws that regulate the handling of financial information. Before we begin, let us get to know more about each other.
 
Understanding Financial Statements 
Financial statements are the communication tools for the organization. There are many aspects of a business’s financial dealings reported in financial statements. Revenues coming in and expenses going out are key data that require reporting. Tangible items like equipment, property, and cash reserves are also reported in financial statements. Understanding these financial statements opens the door to analyzing finance data for budgeting, controlling, and making decisions. 
 This module will discuss the following topics: 
  • Balance sheets 
  • Income statements 
  • Statement of retained earnings 
  • Statement of cash flows 
  • Annual reports 
The two most widely known statements are the balance sheet and income statement.
 
Balance Sheets 
The balance sheet is a report on the financial condition of an organization and is required by GAAP. In the balance sheet, assets are expressed in terms of liabilities and capital, which must equal each other. 
Assets are the cash on hand, properties owned, and monies owed to the organization and can be liquidated and pay the organization’s debt. 
Liabilities are the debts the organization owes to their creditors and this goes against assets. In addition, the organization’s assets belong to the owners, this is called capital, and this goes against the assets. Never spend your money before you have earned it. Thomas Jefferson 
The balance sheet can reveal a lot about a company. The level of debt the companies owes against what it owns in cash and properties could reveal a liquidity problem. 
Furthermore, if a company has no debts and huge level of assets, this may be a sign that the company is not running efficiently and is allowing the assets to remain idle instead of using it for a return. 
Balance sheets are usually set up as columns always comparing the assets versus the liabilities and capital. Many times balance sheets will show the previous month or year’s data for comparison. 
 Later in this course, you will get a chance to use the figures from the balance sheet to determine specific financial ratios that will help you understand the organization’s financial condition.