PPT Slide: Refining Financial Reporting: Economic Profit Balance Sheet

Refining Financial Reporting: Economic Profit Balance Sheet PPT

This PPT slide, part of the 106-slide Corporate Performance Measurement PowerPoint presentation, presents a framework for developing an Economic Profit (EP) balance sheet, emphasizing the need to adjust traditional accounting practices. It outlines the removal of short-term non-interest bearing liabilities (NIBL) from the EP balance sheet. This is crucial because capital returns are not anticipated on amounts owed, such as wages payable.

The visual representation categorizes various assets and liabilities, illustrating how they fit into the EP balance sheet. Cash, receivables, inventories, and fixed assets are shown, with a clear distinction made for short-term NIBL. The slide also highlights that the net fixed assets category does not differentiate between tangible and intangible assets, which can impact the overall assessment of a company's financial health.

Another key takeaway is that the net assets on the EP balance sheet can significantly exceed those on a traditional balance sheet after necessary adjustments for accounting distortions. This suggests that a deeper analysis of financials can reveal a more accurate picture of economic performance.

The slide serves as a guide for executives looking to refine their financial reporting and performance measurement. By understanding these adjustments, organizations can better align their financial statements with economic realities, ultimately leading to more informed decision-making.

This slide is part of the Corporate Performance Measurement PowerPoint presentation.

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