Accounting for Managers Essay Example | Topics and Well Written Essays - 3500 words

Accounting for Managers - Essay Examplest detailed profit and loss theme is given in the annual report, scarce UK listed companies are required to make annual and half year results announcements as well. The full year results announcement is shorter and covers the same period as the annual report, precisely it is released earlier.Many companies make quarterly announcements, as companies in the US and many other countries are required to. Unsurprisingly, UK listed companies that also have a US itemization are very likely to report quarterly.In a simple case the profit or loss equals the increase or decrease in the companys assets as shown on the balance sheet. This is rarely exactly true and the statement of total recognised gains and losses reconciles the P &L to the changes in equity shown on the balance sheetIn accordance with the accrual principle, costs and revenues are matched so that, for example, sales and purchases made on credit during a year, but maybe not yet paid for , will be included in the P&L for the year.Most of the detail in the profit and loss account comes from the need to provide detail of costs and, to a lesser extent, revenues. This leads to the general form of a P&L that looks something like thisAs can be seen, the P&L contains several profit numbers. Each of these gives us different, and useful, culture. In addition, the P&L (perhaps together with other information) usually gives us enough information to calculate several other profit numbers such as EBITDA and EBITAThese can give investors a better idea of the underlying business (the defense for doing it). For example, if the company has decided to sell a particular operation and the price has been agreed, shareholders do not really need to worry too much just about that operations performance.As well as the valuation ratios, the P&L provides the numbers for measures of the performance and efficiency of the business, such as margins, ROCE, and some measures of financial percep tual constancy such as interest