There are 2 types of financial reporting

1. Project profitability

2. Product line profitability

3. Customer profitability

4. Business Unit P&L

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RegulatoryReporting

1. Income Statement or Profit & Loss (P&L)

2. Balance Sheet

3. Cash flow statement

ManagementReporting

External audiencePrepared in collaboration with

accountant

Internal audienceFull freedom in what you do &

how you do it

Management reporting is mainly for internal use Management reporting is used to support decision-making

Define strategic Priorities Allocate resources Determine pricing and cost initiatives Evaluate real performance by de-averaging Reward teams (i.e. performance management)

Uses similar data than regulatory reporting but shows more detail and can be split in different units of choice, e.g. Project profitability Product line profitability Customer profitability Business Unit P&L

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What do we mean with de-averaging (1/2)?

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What do we mean with de-averaging (2/2)?

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Key take-aways of this module

As an entrepreneur, it is important to understand financial statements To plan & budget your business To manage teams & resources To negotiate with customers & suppliers To negotiate with banks and shareholders

Two types of financial reporting exist Regulatory reporting for an external audience Management reporting for internal decision making

There can be important differences between the result in the P&L and the cash flow statement Cash planning is crucial for all companies, but especially for

start-ups

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End of this module

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