Management control - revisions

Balance Sheet

Bilan

P&L account or Income statement

CDR

disadvantages of FA

• out of date by the time they came (look at the past)

• involved in the whole org rather than specific things

=> MA fills those gaps

Diff btw FA and MA (table) (5)

Core missions of MC 3

Decision making

planning

control

operational profit formula

ope R - ope exp

EBITDA formula

ope profit + depreciation exp + excep profit - excep exp

what is ope profit

it showcases the profit generated ONLY by the usual activity of the company

why does the EBITDA don’t include the depreciation expenses 2

Dep ins’t a real cash outflow (already gone)

Dep depends on FA choices not on operating perd

EBITDA utility

measures a company's core operating profitability before deducting interest, taxes, and non-cash depreciation and amortization expenses.

diff btw an exp and a cost

An expense is an amount in the financial accounting, decreasing the profit and used to generate revenues.

A cost is a sum of expenses. A cost can be related to a product, a department, an activity. A cost is defined by its content and calculation time (past cost / forecast cost).

why does the profit in the P&L account ins’t enough to take strategic decisions?

The profit in the financial P&L account is a global indicator of the past performance. It is not sufficient totake strategic decisions.

For these decisions you need detailed information, forecast, non financial information… for example: which product is your best seller, customer satisfaction, production cost of the different products and services…