Question

Think of the traditional, basic income statement structure...i.e.., a) sales is the top line, then we have b) cost of goods sold and c) SG&A expenses in order to calculate an operating income (EBIT). Then d) if we consider interest-bearing debt’s expense and finally e) taxes in order to calculate a final value of f) net income.

For each of the items above (a-f) tell me which of the following economic players either provides or receives the item: Debt holders, customers, stock holders, government, employees, suppliers. Additionally, for each of these, tell me whether the item (a-f) is an inflow FROM the player to the firm or TO the player from the firm

Answer 1

Interest bearing debt expenses comes from debt holders the loan the company has taken

Customers comes in revenue as they have purchased goods or services of the company

Stock holders are entitled to recieve what is left over after meeting all the expenses of the company hence net income

Government gets taxes

Eployees comes under SGA and COGS depending on the purpose

Sales is an inflow for the company by the cutomers and other income sources

COGS is an outflow for the company to producegood and services

SGA is an outflow for the company for meeting advertisement, staffing adn marketing expenses

Interest bearing debt expense is an otflow for the company to the debt holders

Taxes is an otflow for the company to the government

Net income is what is left for the shareholders and preference shareholders

All these above are based on accrual based concept on accounting

please specify if you need cash outflow.