Income Statement
| SALES REVENUE | Sale price multiplied by the quantities sold or by the number of services provided. |
| ROYALTY INCOME | % royalty multiplied by the selling price and the quantities sold; in the case of a fixed commission, the commission multiplied by the quantities sold |
| DISCOUNTS AND RETURNS | % discount multiplied by the selling price and the quantities sold; in the case of returns, the quantity of returns multiplied by the selling price |
| CHANGE IN INVENTORY OF TRADE PRODUCTS | This is a “Model A” Income Statement item. It is the difference between the value of the year-end inventory minus the value of the beginning of the year inventory. The inventory value is calculated as follows: the most recent unit purchase cost of the products multiplied by the quantities purchased and not yet sold. |
| CHANGE IN INVENTORY OF FINISHED GOODS | This is a “Model A” Income Statement item. It is the difference between the value of the year-end inventory minus the value of the beginning of the year inventory. The inventory value is calculated as follows: a portion of production costs is allocated to the unsold quantities. Specifically, a portion equal to the unsold quantities / total quantities produced. Allocated costs include: raw materials and consumables, production personnel, outsourced processing, transportation, rentals and leasing, and depreciation of production equipment. |
| CHANGE IN INVENTORY OF MATERIALS AND CONSUMABLES | This is a “Model A” Income Statement item. It is the difference between the value of the year-end inventory and the value of the beginning of the year inventory. The inventory value is calculated as follows: the most recent unit cost of the raw material or consumable multiplied by the quantities not yet used. |
| COST OF SALES | This is a “Model B” Income Statement item. A portion of production costs is allocated to the quantities sold. Specifically, a portion equal to the quantities sold / total quantities produced. Cost of goods sold includes both direct and indirect production costs. Allocated costs include: raw materials and consumables, production personnel, external processing, transportation and logistics, rentals and leasing, all depreciations and amortizations, and other operating costs. |
| LEASING | Leasing expenses are reported on the Income Statement as they are incurred. The initial downpayment, if any, is expensed in the year payment is incurred. There is no calculation of the present value of future payments and recognition of an asset and a liability. |
| DISTRIBUTION | In case of a % over sales, the % of distribution cost multiplied by the selling price and the quantities sold; in the case of fixed distribution cost, the unit cost multiplied by the quantities sold |
| PAYROLL COSTS | The number of employees in the year multiplied by the sum of the following costs: gross salary, bonus, employer contributions (social charges) on both gross salary and bonus, pension fund accrual. |
| RISKS AND CHARGES | The annual accrual of expenses related to risks and charges. On the income statement this item is generated from the user’s input into the appropriate table. |
| FINANCIAL INCOME AND EXPENSES | The calculation of interest income and interest expense and other financial income and charges is left to the user who enters the annual income or cost in the table. |
| INCOME TAXES | Income taxes are calculated as follows: the pre-tax result, i.e. the operating profit minus/plus financial income/expenses, multiplied by the tax rate specified by the user. If the user also specifies that losses can be carried forward, the tax rate is applied whether the result is a profit or a loss. Specifically, if the result is a loss, the calculated taxes are not an expense but a positive component of income. |
Balance Sheet
| CASH AVAILABILITY (DEFICIT) | Liabilities and Equity minus Assets. |
| FINISHED GOODS INVENTORY, MATERIALS INVENTORY | Please refer to the description of the respective items in the Income Statement table. |
| TRADE AND OTHER RECEIVABLES | The calculation is based on the average collection days specified by the user. The average collection days are applied to annual sales, less any discounts and returns, plus the relevant VAT. |
| VAT RECEIVABLE (PAYABLE) | VAT payable is calculated by multiplying revenue by the VAT rate specified by the user; VAT input is calculated by multiplying costs, excluding personnel costs, by the VAT rate specified by the user. The net receivable or payable balance is the total VAT on annual revenue minus the total VAT on annual costs. |
| DEFERRED TAXES FROM NOL | NOL stands for Net Operating Losses. This item refers to the possibility of having a tax benefit by using losses incurred in non-profitable years against pre-tax income in the profitable years. If the user selects this option, in years when the pre-tax result is a loss, deferred taxes are accrued in the Income Statement under “Income taxes” as a positive component of income and in the Balance Sheet under “Deferred taxes from NOL” as an asset. The amount accrued is equal to the pre-tax result multiplied by the tax rate specified by the user. In years when the pre-tax result is a profit, if there is a balance under “Deferred taxes from NOL” accrued in previous years, this balance is decreased by an amount equal to 100% of the taxes due for that year and, at the same time, an expense is recognized in the Income Statement under “Income taxes.” The balance under “Deferred taxes from NOL” is used until there is capacity. If the taxes for the year exceed the available balance, the excess is still recognized in the Income Statement as a tax expense. |
| TRADE AND OTHER PAYABLES | The calculation is based on the average payment days specified by the user. The average payment days are applied to annual costs plus VAT. Fixed asset costs, personnel costs, and other costs (travel expenses, insurance, bank charges, utilities, self-employment costs, commissions, stamp duties, and taxes) are excluded from the calculation basis as it is assumed that these costs will be paid almost immediately. |
| BORROWINGS | The amounts received as financing and the related debt service (repayments of debt) are calculated by the user and entered into the tables. |
| RETAINED EARNINGS INCLUDING CURRENT YEAR RESULT | It is the sum of the year’s result and the results achieved in previous years. |