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SESSION 2A: INCOME STATEMENT COMPARISONS Accounting for Finance - - PowerPoint PPT Presentation
SESSION 2A: INCOME STATEMENT COMPARISONS Accounting for Finance - - PowerPoint PPT Presentation
SESSION 2A: INCOME STATEMENT COMPARISONS Accounting for Finance Income Statement: A Life Cycle Perspective 2 A Young Company: Pelotons Income Statement (2019) in its Prospectus 1 2 4 3 3 A Growth Company: Netflixs Income Statement
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A Young Company: Peloton’s Income Statement (2019) in its Prospectus
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A Growth Company: Netflix’s Income Statement (2020)
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A Mature Company: Coca Cola (2019)
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Revenue Breakdown for Coca Cola: By Geography
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An Aging Company: Toyota
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Sector and Industry Differences
¨ The accounting standards that govern how
companies measure revenues and earnings may be the same across companies, but there are some sector-specific differences.
¤ For commodity companies, the differences often arise
from costs expended exploring for commodity reserves and extracting the commodity from reserves.
¤ For financial service companies, the challenge often lies in
defining revenues and debt, since the latter is less a source
- f capital and more raw material.
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A Commodity Company: Total (France) in 2019
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A Business Breakdown for Total
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A Financial Service Company: HSBC in 2019
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A Pharmaceutical Firm: Dr. Reddy’s in 2019
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Bottom Line
¨ Much is made of the differences in accounting standards
around the world and across businesses, but the reality is that accounting standards are converging across the world, rather than diverging.
¨ While revenues come in different forms for different
companies and operating expenses take varied forms, the end game with gross profit, operating and net income remains the same, i.e., to measure profits are different levels.
¨ In theory, you should be therefore able to compare these