Financial Reports EGN 5622 Enterprise Systems Integration Spring, 2013 Financial Reports EGN 5622...

Financial ReportsFinancial Reports

EGN 5622 Enterprise Systems IntegrationEGN 5622 Enterprise Systems IntegrationSpring, 2013 Spring, 2013


Concepts & Theories Concepts & Theories

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Financial Reports Financial Reports

Financial Reporting in Enterprise Systems (ES) can be classified as either internal reporting, or statutory (external) reporting.

Modern management goals aim at real-time decision making, supported by the increased use of online reporting, interactive analysis, and intuitive reporting.

While companies are required to deploy ES to handle basic business transactions, they also need to efficiently retrieve transactional data in real-time of a specific information structure around cross-functional business processes.

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Financial Reports Financial Reports

Internal Reporting

ES Reporting Features

External Interfaces, ready to download reports in formats

External Interfaces, ready to download reports in formats

Real time database, ready to supply with Integrated Information

across business processes

ESDatabase

ExternalReporting

Reporting Types

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Financial Reports (- continued)Financial Reports (- continued)Internal Reporting:Provides reports that meet a wide range of internal informaton needs and enable managerial decision-making.Examples: inventory stock overview and plant maintenance reports

External ReportingProvides reports to meet regulatory and external reporting requirements.Examples: balance sheet, income statement

Integrated Information:Supplies real-time information that is fully integrated across cross-functional business processes and uses the same underlying data.

External Interface:Enables download of report lists to several file formats including spreadsheet applications such as Microsoft Excel. Supports other external interfaces including e-mail, Internet, PDAs, and print devices

January 2008January 2008

© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All The Rushmore Group, LLC 2008. All rights reserved. rights reserved. 66

Target AudienceTarget Audience

InternalExecutivesSenior ManagementAccount managersAdministration StaffEmployees

ExternalLegal AuthoritiesBanksAuditorsShareholdersInsuranceTaxing AuthoritiesMediaFinancial Analysts

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Financial Reports (- continued) Financial Reports (- continued)

Guidelines for efficient and cost-effective reporting processes

Ensure optimal decision making through the improved use of information

Reduce data complexity and promote handoffs through smooth data flow

Concentrate on data analysis instead of scanning printed reports

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Reporting is a tool:◦through which internal and external stakeholders

can understand the organization’s financial performance as a result of the business decisions made by management in the period defined

Two categories of financial accounting reports: ◦displaying account information, and ◦generating financial statement.

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Accounting Information◦Account information can be obtained at three

levels according to the “Introduction to Financial Accounting”:

balance display, line item list, and original FI document.

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Financial StatementsFinancial StatementsThe goal of financial accounting is to report data

in order to meet legal and regulatory requirements.

The reporting takes the form of financial statements including ◦ Balance sheet◦ Income statement (profit and loss), and ◦ Cash Flows statement

The specific accounts that need to be included in these statements are determined by the external requirements.

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Financial StatementFinancial StatementFinancial statements can be generated for

different organizational levels including one or more company codes and business areas.

Financial statements are created from financial statement versions. ◦ A financial statement version is a hierarchical grouping of

general ledger accounts that must be included in the financial statement.

◦ Several financial statement versions can be defined, and each is defined to meet different reporting requirements.

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Financial StatementFinancial StatementThe balance sheet summarizes

◦Assets, ◦Liabilities, and ◦Owner’s equity of a business at a point in time.

The income statement summarizes ◦revenues◦expenses of a firm over a particular period of

time◦incomes before and after tax

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Financial StatementFinancial StatementA conceptual framework for financial analysis

provides the analyst with an interlocking means for structuring the analysis.

◦ In the analysis of external financing for example, one is concerned with firm’s needs for funds, its financial condition/performance, and its business risk.

◦ Upon analysis of these factors, senior managers are able to determine the firm’s financial needs and to negotiate with outside suppliers of capital.

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Financial StatementsFinancial Statements

Balance sheet accounts include assets, liabilities, and equity.

Assets = Liability + Equities

Profit and loss accounts include revenue and expenses within a given period of time (e.g., monthly, quarterly, or yearly)

Cash Flows (Statement)

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Balance Sheet – AssetsBalance Sheet – AssetsAssets are things of value that a company owns or controls

that accountants have agreed to measure in monetary terms.

Examples of these accounts include:◦Current assets:

Cash Accounts receivables Inventory Prepaid expense

◦Fixed assets Land Building Equipment



Balance Sheet – LiabilitiesBalance Sheet – LiabilitiesLiabilities are things that a company owes or must

provide services in order to settle that accountants have agreed to measure in monetary terms.

Examples of these accounts include:◦Accounts payable◦Notes payable◦Bonds payable◦Unearned revenue

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Balance Sheet – EquityBalance Sheet – EquityEquity is simply the mathematical

difference between assets and liabilities.

It includes the monetary amounts collected with respect to ◦all preferred and common stock transactions,◦the aggregate net income reported since

organization of the company, and ◦a reduction for dividends that have been paid to

stockholders.

January 2007 (v1.0)January 2007 (v1.0)

© 2007 by SAP AG. All rights © 2007 by SAP AG. All rights reserved. SAP University Alliance. reserved. SAP University Alliance. The Rushmore Group, LLCThe Rushmore Group, LLC 1818

Balance Sheet – Sample Balance Sheet – Sample

AssetsCash 1,000Accounts Receivable 3,000Equipment 500

Total Assets 4,500

LiabilitiesAccounts Payable2,250Taxes Payable 250

Total Liabilities 2,500

EquityCommon Stock 1,750Retained Earnings 250

Total Equity 2,000

Total Liabilities and Equity 4,500



Balance Sheet



Income StatementIncome StatementPresentation of an organization’s Revenues,

Expenses, and Income for a given period of time (e.g., monthly, quarterly, or yearly)

Revenues, in a simple sense, are inflows of cash as a result of selling activities or the disposal of company assets

Expenses, in a simple sense, are outflows of cash or the creation of liabilities to support company operations

Net Income before TAX= Revenue–ExpensesNet Income after TAX= Revenue-Expenses -Tax



Income Statement – RevenuesIncome Statement – Revenues

The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year.



Income Statement – ExpensesIncome Statement – Expenses

The monetary amounts paid to vendors in settlement for goods purchased by company or services rendered to our firm by other companies during the current fiscal year.◦Cost of Goods Sold (COGS)◦Payroll◦Utilities◦Taxes◦Interest



Income Statement - SampleIncome Statement - Sample

RevenueSales 11,000Deductions -750

Total Revenue 10,250

Operating ExpensesCost of Goods Sold 4,500Operating Expenses 3,750

Total Expenses 8,250

Net Income Before Taxes 2,000Taxes -750Net Income 1,250

January 2008January 2008© SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. reserved. 2424

Income Statement

January 2007 (v1.0)January 2007 (v1.0)© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLCGroup, LLC 2525

Statement of Cash FlowsStatement of Cash Flows

Considers the associated changes, both inflows and outflows, that have occurred in cash – arguably the most important of all assets – over a given period of time (e.g., monthly, quarterly, or annually)

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Financial RatiosFinancial RatiosFinancial ratios are the tools used to analyze financial condition and performance. Financial ratios can be divided into five basic types:

Liquidity, leverage (debt), coverage, activity, and profitability.

No one ratio is itself sufficient for realistic assessment of the financial condition and performance of a firm. With a group of ratio, reasonable judgments can be made.

Comparing one company with similar companies and industry standards over time is crucial. Such a comparison uncovers leading clues in evaluating changes and trends in the firm’s financial condition and profitability. This comparison may be historical, but it may also include an analysis of the future based on projected financial statements.

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Financial RatiosFinancial Ratios

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SAP Implementation SAP Implementation

R/3

SAP Module ViewSAP Module View

Integrated SolutionClient / Server

Open Systems

FinancialAccounting

Controlling

Fixed AssetsMgmt.

ProjectSystem

Workflow

IndustrySolutions

ProductionPlanning

Sales &Distribution

MaterialsMgmt.

PlantManagement

QualityMaintenance

Human Resources

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SAP Reports ToolsSAP Reports ToolsSAP Standard Reports (in focus)SAP Report Painter ReportSAP QueryABAP ReportData Warehouse (to introduce)

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SAP Standard ReportsSAP Standard Reports

SAP has thousands of reports available to use.

Each report can be customized by the user to meet different report requirements, by setting different report selection criteria.

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SAP Report Painter ReportSAP Report Painter Report• Used to deliver many tabular style management

reports to produce various financial statements.

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SAP QuerySAP Query• Used to run queries on SAP tables to return data.• • Before engaging in SAP Query, the user should

look at the available standard reports in SAP; those reports that are based on the same tables should be able to return the same type of data the user is looking for.

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ABAP ReportABAP Report• ABAP/4 (Advanced Business Application

Programming) is used to code SAP software and can also be used to customize reports.

• The downside of ABAP may not be automatically compatible with upgraded versions.

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SAP Data WarehouseSAP Data Warehouse• SAP Netweaver Business Intelligence (BI/BW) is

SAP’s own data warehousing tool

• One benefit of using a data warehouse is that it reduces the load on SAP ECC (ERP Central Components) system.

• The downside is that the data warehouse solution will be only updated overnight, then the data to be used may not be updated to the moment.

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SAP Standard ReportsSAP Standard ReportsThree basic steps to running a standard

report:1.Access the report (find the SAP command

transaction (T) code)2.Enter selection criteria3.Execute the report

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SAP Standard ReportsSAP Standard Reports• Accounts Payable Reports• Accounts Receivable Reports• Asset Accounting Reports• General Ledger Reports• Cost Centers:

• Actual/Plan/Variance Report• Profitability Analysis:

• Plan/Actual Comparison Report• Balance Sheet• Profit and Loss Statements

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Accounts Payable ReportsAccounts Payable Reports

It revolves around the reporting of invoices due for payment.

The information is important from a cash flow point of view, as each vendor invoice contains payment terms that determine when the invoice is due for payment.◦Vendor line item report shows all the vendor

items.

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Useful Reports in AP AreaUseful Reports in AP Area

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Vendor Document DisplayVendor Document Display

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Accounts Receivable ReportsAccounts Receivable Reports

It revolves around the reporting of unpaid (customer) items. This is more of an internal requirement than an external requirement. The information is important from a cash flow point of view.

• Customer line item report shows all the customer’s items.

• Customer balance statistics report monitors customer’s payments, especially pass-due items.

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Accounts Receivable ReportsAccounts Receivable Reports

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Customer (Receivable) Balance DisplayCustomer (Receivable) Balance Display

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Customer Line Item DisplayCustomer Line Item Display

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Customer Document DisplayCustomer Document Display

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Asset Accounting ReportsAsset Accounting Reports

Asset Explorer is the primary tool used to run asset accounting reports.

◦It provides analysis for a particular asset.

◦In addition, users can use its Asset History Sheet, which is very detailed asset register.

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Asset Accounting ReportsAsset Accounting Reports

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General Ledger ReportsGeneral Ledger Reports

The most important reports of general ledger are:◦balance sheet ◦income statement, and ◦cash flow.

They can be generated monthly, quarterly and annually

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General Ledger ReportsGeneral Ledger Reports

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Cost Centers: Actual/Plan/Variance Cost Centers: Actual/Plan/Variance Report (internal report)Report (internal report)

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Profitability Analysis: Plan/Actual Profitability Analysis: Plan/Actual Comparison Report (internal report)Comparison Report (internal report)

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Profitability Analysis: Plan/Actual Profitability Analysis: Plan/Actual Comparison Report (in detail)Comparison Report (in detail)

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Balance SheetBalance Sheet

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Balance Sheet (Assets)Balance Sheet (Assets)

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Balance Sheet (Liabilities & Equity)Balance Sheet (Liabilities & Equity)

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Income StatementsIncome Statements

Exercises: Exercises: (Due date 2/25/2013)(Due date 2/25/2013)FI 4A: Post Transfer of funds to Bank AccountMM6: Create a new vendorMM7: Create material master for trading goodsMM8: Display Stock/Requirements listMM9: Create a purchase requisitionMM10: Display stock/requirements listMM11: Create request for quotation for your requisitionMM12: Maintain quotation from vendorsMM13: Evaluation quotations on priceMM14: Rejecting quotationsMM15: Create a purchase order referencing an RFQMM16: Create a goods receipt for the purchase orderMM17: Verify the purchase receipt of goods MM18: Create an invoice receipt from vendorMM19: Display purchase order history

Exercises:Exercises:MM20: Create a goods receipt for purchase orderMM21: Create an invoice receipt from vendorMM22: Post payment to vendorMM23: Display vendor line itemsMM24: Display and review general ledger account balances and

individual line itemsFI 17: Run balance sheet/profit and loss statementsFI 18: Assign General Ledger Accounts to Financial Statement

VersionFI 19: Run Balance Sheet / Profit and Loss Statements

Financial Reports EGN 5622 Enterprise Systems Integration Spring, 2013 Financial Reports EGN 5622...

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Transcript of Financial Reports EGN 5622 Enterprise Systems Integration Spring, 2013 Financial Reports EGN 5622...