Slides 1 2 calculate financial position and net change in fi

Calculate Financial Position and Net Change in Financial Position © Dale R Geiger 2011 Why is it useful to know an entity’s financial position? © Dale R Geiger 2011 Terminal Learning Objective • Action: Calculate Financial Position and Change in Financial Position • Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors • Standard: With at least 80% accuracy: • Classify assets & liabilities • Classify revenues and expenses (cash basis) • Enter relevant report data to solve Financial Position equation (using macros provided in Excel template) © Dale R Geiger 2011 Meet the Simmons Family • Gomer, Madge and kids: • Bert, Lacy and baby Maddie • Stunt doubles for a popular cartoon family • Task: Calculate the family’s Financial Position © Dale R Geiger 2011 What is Financial Position? • Financial position is represented by the equation: Assets – Liabilities = Financial Position Or Assets = Liabilities + Financial Position • Financial Position may also be called Equity or Net Assets © Dale R Geiger 2011 What’s an Asset? • An Asset is: • Something you OWN • Represents FUTURE BENEFIT • What kinds of assets might the Simmons family own? © Dale R Geiger 2011 What’s an Asset? • An Asset is: • Something you OWN • Represents FUTURE BENEFIT • What kinds of assets might the Simmons family own? © Dale R Geiger 2011 What’s an Asset? • An Asset is: • Something you OWN • Represents FUTURE BENEFIT • What kinds of assets might the Simmons family own? © Dale R Geiger 2011 What’s an Asset? • An Asset is: • Something you OWN • Represents FUTURE BENEFIT • What kinds of assets might the Simmons family own? © Dale R Geiger 2011 What’s a Liability? • A Liability is: • Something you OWE • Represents FUTURE SACRIFICE • A creditor’s CLAIM against your assets • What kinds of Liabilities might the Simmons family have? © Dale R Geiger 2011 10 The Simmons: Changes in Financial Position • What are the Revenues? • Gomer’s gross pay and Madge’s babysitting $2025 • What are the Costs? • Tax withholding, gasoline, doughnuts, groceries, dentist, window, and mortgage interest = $1933 • What is the Net Change in Financial Position? • Revenues $2,025 – Costs $1,993 = 32 Increase • What is the Ending Financial Position? • Beginning $9,327 + Increase $32 = Ending $9,359 © Dale R Geiger 2011 49 The Simmons: Changes in Financial Position • What are the Revenues? • Gomer’s gross pay and Madge’s babysitting $2025 • What are the Costs? • Tax withholding, gasoline, doughnuts, groceries, dentist, window, and mortgage interest = $1933 • What is the Net Change in Financial Position? • Revenues $2,025 – Costs $1,993 = $32 Increase • What is the Ending Financial Position? • Beginning $9,327 + Increase $32 = Ending $9,359 © Dale R Geiger 2011 50 The Simmons: Changes in Financial Position • What are the Revenues? • Gomer’s gross pay and Madge’s babysitting • What are the Costs? • Tax withholding , gasoline, doughnuts, groceries, dentist, window, and mortgage interest • What is the Net Change in Financial Position? • Revenues $2,025 – Costs $1,993 = $32 Increase • What is the Ending Financial Position? • Beginning $9,327 + Increase $32 = Ending $9,359 © Dale R Geiger 2011 51 The Simmons: Statement of Activities for month of January 2011 Revenues: Gomer’s Salary (Gross) Madge’s babysitting Total Revenues Costs: Interest Groceries Tax Withholding Gasoline Dentist Broken Window Doughnuts Total Costs Net Change in Financial Position Add: Financial Position January 1, 2011 Financial Position January 31, 2011 © Dale R Geiger 2011 $2,000 25 $938 600 150 120 100 50 35 1,993 $2,025 32 9,327 $9,359 52 Graphic Representation of Net Change $2025 $32 $1993 © Dale R Geiger 2011 53 Graphic Representation of Net Change $9359 $32 $9327 © Dale R Geiger 2011 54 The Simmons: Statement of Financial Position 1/31/11 Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (327+32) 359 Total $240,109 Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total Liabilities $230,750 Net Assets: 9,359 Total $240,109 © Dale R Geiger 2011 55 Learning Check • What activities will cause financial position to increase? • What activities will cause financial position to decrease? © Dale R Geiger 2011 56 Financial Position Spreadsheet Enter data in the white spaces © Dale R Geiger 2011 57 Financial Position Spreadsheet Use Tabs to Navigate © Dale R Geiger 2011 58 Financial Position Spreadsheet The spreadsheet uses the data you entered to produce the Statement of Financial Position and the pie graph © Dale R Geiger 2011 59 Statement of Activities Spreadsheet Enter Transaction Data into the register © Dale R Geiger 2011 60 Statement of Activities Spreadsheet After entering Data, Press button to Create Statement Of Activities © Dale R Geiger 2011 61 Statement of Activities Spreadsheet Statement of Activities shows: Total Revenues, Total Costs , Change in Financial Position, and Ending Financial Position 62 © Dale R Geiger 2011 Practical Exercise © Dale R Geiger 2011 63 ... an entity’s financial position? © Dale R Geiger 2011 Terminal Learning Objective • Action: Calculate Financial Position and Change in Financial Position • Condition: You are training to become... Madge and kids: • Bert, Lacy and baby Maddie • Stunt doubles for a popular cartoon family • Task: Calculate the family’s Financial Position © Dale R Geiger 2011 What is Financial Position? • Financial. .. Financial position is represented by the equation: Assets – Liabilities = Financial Position Or Assets = Liabilities + Financial Position • Financial Position may also be called Equity or Net Assets