Financial Statements Explained Pt 4

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I finish my Financial Statements Tutorial by explaining how financial statements are effected when your inventory prices change. I explain the effects of First In First Out versus Last In First Out.I explain how the Cash Flow Statement is used. Then I finish off the tutorial by explaining how to handle fixed assets and depreciation.


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24 responses to “Financial Statements Explained Pt 4”

  1. Edgar Iniesta Avatar

    the payment of dividends for owners does affect the cash or the retained earnings.

  2. abdou sam Avatar

    it s me again, i think really there is a pb; for example of the LIFO finance 5:15, i think it should be like that

    Cash ($1420) = Cash Prev.($490) -Raw( $330 ) – Rent ($ 240 ) + Sales ($1500) // and not Net Prof.
    Raw Mat.($150 ) the same;
    EWTD( $930 ) = GP( $1170 ) – Expenses ( $240 ); which is exactly the net profit of that Statement.

    Assets | Liabilities
    _________________________________________________________
    Cash $1420 | Orgin.Inv. $100
    Raw $150 | Retained $540
    | Earn. Wk. End. $930
    | Total $1570
    __________________________________________________________
    Total Assets $1570 | Liab& Ow.Eq $1570
    (seriously we sold 300 piece |
    we earn that) |
    __________________________________________________________

    Please, If i am wrong Correct me, and try to explain, don't just say ♠♠You Are Wrong♠♠. thanks.

  3. abdou sam Avatar

    sorry but, i think there is a mistake somewhere in the first half of the tutorial 4:35 ; how could we buy $330 of raw material and rent $240 which is $570 and we had only $490 of cash, i know it s only an exemple, but i am confused, and should we not add the sales on the first equation and not the Net profit, because the net profit includes the rent and the raw mat. already.

  4. Jonathan Alexander Avatar

    These videos did help break it down for me better! I have had multiple accounting classes and none truly helped where I could fully comprehend. I have two questions: 1) How do you know what the depreciation schedule is? Is there a resource? I don't know how you determine the life cycle of different products. I'm a nursing home administrator so these would be computers, IV poles, beds, etc. 2) Do you have videos on what happens next after reading financial statements? For instance, what I'm struggling with is making decisions based on the information within them. I'm looking at them but what do I need to look for and how can that help my decision? It's obvious to increase cash and decrease debt; is that really all there is to it?

  5. Miguel Angel Avatar

    There is a mistake in this video. in the income statement you take off the rent and the cost of good sold from sales and then you do the same with the net profit when you add it to the balance statement. so pretty much you are counting your rent twice and the same with cost of goods sold. the others videos were very good but this one can lead to confusion.

  6. Johaina ben Avatar

    well done 
    I saw it a lot of time but still I didnt undrestund from where u calcul in FIFO and LIFO that 150 and 165,,,,,,,,,,,,

    Thanks a lot for your effort

  7. Anand Vaidyalingan Avatar

    Thank u Derek.. 🙂 Can u make a tutorial of different financial products.. ?

  8. Mike Garaz Avatar

    Very helpful, thanks for the video

  9. Elizabeth Holmes Avatar

    OMGOSH could you speak ANY faster. It was so clear in the 1-3 and this one is like you chugged 12 energy drinks. Slow down!!  You're tutorials are great just slow down! 

  10. Derek Banas Avatar

    Thank you 🙂 I became a stock broker because I past the test they gave me. I don't know what it is like today, but in my day you basically had to prove you were comfortable cold calling and you had to pass the series 7.

  11. Schniedelwutz Avatar

    Good work 🙂 If more people would have basic understanding of financial statements, no one would have invested in fraudulent companies like Enron. BTW, how did you become a stock broker without studying business administration?

  12. Derek Banas Avatar

    I'll see what I can do. Thanks for the request

  13. Rigo Gomez Avatar

    Hey Derek

    Can you please explain The Primary Ratios Used to Analyze a Company's Receivebles

    and Liquidity Ratios
    and Solvency Ratios

  14. Rigo Gomez Avatar

    Hey Derek
    Can you please explain The Primary Ratios Used to Analyze a Company's Receivebles
    and Liquidity Ratios

  15. Derek Banas Avatar

    I'll have to look into that. Thank you for pointing out a potential error 🙂

  16. Nam Nguyen Avatar

    You might have made a mistake here. Please correct me if i am wrong. Total sale of $1500 is correct amount to be added to cash, Not the net profit of $930. Also the net profit of $ 930 is the one that goes to Earnings week ending, not $360 because COGS and Expense were taken out of the total sale already which results in net profit of $930. In other words, you deducted COGS and Expense out of total sale TWICE which results in $360.

  17. Kilo V.S Avatar

    what formula did you use to get $600 as net earnings

  18. Kilo V.S Avatar

    please explain exactly how you got ending inventory of 165 the FIFO VS LIFO Income statements

  19. Derek Banas Avatar

    @zippydeeify I'll have to look into that. I made this a year ago, so I can't remember everything I talked about. Sorry about that. That is just how my brain works

  20. zippydeeify Avatar

    Hi Derek. Sorry to bother you again. At the 4:06 mark, based on the previous parts of your 4-part tutorial, I believe what should be included in the calculations of "Cash" and "EWTD" is the "sales" of $1,500, instead of the "net profit" of $945, right?? As per your previous formulas, i) cash = prev cash – inventory – expenses + sales (NOT net profit), and ii) ewtd = sales (NOT net profit) – expenses – cogs. Please clarify.

  21. Derek Banas Avatar

    @zippydeeify your welcome. Thanks for watching and taking the time to show your appreciation.

  22. zippydeeify Avatar

    thank you derek for your generosity in sharing your knowledge!

  23. Derek Banas Avatar

    @RetroSoulSista I'm glad you liked it 🙂 I'm glad I was able to explain a pretty complicated subject in a way that helped

  24. RetroSoulSista Avatar

    This was the best basic accounting tutorial series ever!

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