Question

Q.The financial manager of a firm recently made a presentation. It showed that during the previous 16 quarters the company showed a profit 12 times and a loss 4 times. It is quite likely that the presentation would contain more information than whether the firm showed a profit or loss. Contemplate what that information might be.

Answer 1

When financial manager showed presentation to his seniors he did not show only Profit or Loss for specific period of time. It also shows other important parameters like

• Revenue (or Sales)
• Cost of Goods Sold (or Cost of Sales)
• Selling, General & Administrative (SG&A) Expenses
• Interest Expense
• Taxes
• Assets & Liabilities
• Important Ratios such as Debt/Equity Ratio, Cash Conversion Cycle, Invetory Turnover Ratio, Etc.
• Working Capital
• Cash Flow from Different activities.

based on these details he might be showed following different things

• Comparing quarter-over-quarter numbers (horizontal analysis) as well as industry benchmarking
• Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin
• Trend analysis: are metrics improving or deteriorating
• Rates of return: return on equity (ROE), return on assets (ROA)
• The company’s asset base – ability to generate future revenues
• Liabilities – future obligations the company has to meet
• Working capital – the company’s short-term liquidity position
• Capital structure – how a company is financed between debt and equity
• Depreciation and amortization
• Reasons to justify every numbers.
• Future plans or future growth of company.
• Current and future scenario of Industry.

So these are the possible information that might be present in financial manager's presentation.