Of a company, the following financial data are known: € 85 million turnover. € 8 million profit. Interest expense € 2 million: Short-term interest-bearing debt € 12 million. Liquidity...
Of a company, the following financial data are known:
€ 85 million turnover.
€ 8 million profit.
Interest expense € 2 million:
Short-term interest-bearing debt € 12 million.
Liquidity € 7 million.
Labor costs € 15 million.
Suppose that both the debit and the credit side shows an interest rate increase of 1% and there are no by-calculation capabilities. The profit of this company will drop in the short term by how many percent?
In financial data statements, turnover refers to how much income a company receives in a given financial period: it is the amount of money taken in during a given financial period. In your problem, the amount of income taken in is €85 million, though the period is not specified.
There is a short-term interest-bearing debt of €12 million. The repayment will be debited as a liability, when due, from the turnover of €85 million. In the short-term, the temporary debt is counted as an asset for that period.
Of that turnover, €8 million is profit and will be used, among other possible purposes, for dividend disbursements, if the company offers dividends to stockholders.
On the liabilities side, there is €2 million payable in interest payments. On the assets side, there is cash asset available in the figure of €7 million.
On the liability side, there is a debit of €15 million for labor costs. Labor costs are the costs incurred for the production of goods or the provision of services. labor costs include wages, employment taxes, and benefit package costs. Examples of these costs are federal income tax, workers compensation or unemployment insurances, matched-pension and matched-medical insurance contributions.
From the information you've given, the information given appears to be the basis for calculating a cash flow statement. It tells investors where cash is coming from and where it is going. Cash flow is calculated by adjusting net income by "adding or subtracting differences in revenue, expenses and credit transactions" (Reem Heakal, "What Is A Cash Flow Statement?")