magician, when I look in the Income Statement for the I see two areas that seem to mean the same thing.

for example, pls see the Income Statement for IBM here--> http://finance.yahoo.com/q/is?s=IBM

under Total Revenue I see a field that says "Cost of Revenue = 12,791,000" and I would have thought that that was the operating expenses, but the operating expenses are broken down below and their sums do not match up with the "Cost of Revenue" field.

So what does "Cost of Revenue" mean? I couldn't find it defined in investopedia.com.

p.s.-- I'll take your advice and keep my mouth shut regarding the CapEx -vs- OpEx column my salary falls in.

 

[QUOTE=tritium_pie,Dec 22 2005, 08:00 PM]So what does "Cost of Revenue" mean?

 

Capital Expenditures: Money spent on fixed assets used to start, maintain, or expand a business.

The term comes from the outflow of cash being an expenditure that gets capitalized (recorded as an asset and expensed periodically through depreciation) as opposed to being initially fully expensed.

Not really, tax code is built around a cash basis system. Thus, his salary will probably be fully expensed on the return (assuming all was paid), while it will be periodically expensed for financial accounting purposes. This difference will cause a tax related payable in the balance sheet.

I concur.

 

The reason you pronounce the 't' in his name is because it's spelt with two 't's - Buffett.

That's of course, assuming you're talking about Warren Buffett.

 

Would it be safe to say...

Gross Sales - EBITDA = Net Working Capital (i.e.-- Cost of running the business)?

and also, would it be safe to say...

Short Term Debt + Long Term Debt = Net Interest Bearing Debt (i.e.-- I have excluded everything else in the Liabilities column of the Balance Sheet as those are not interest bearing)

p.s- I've found that moneycentral.msn.com has pretty good financial info, that is to say, they use commonly accepted financial terms

 

Not even close.

Net working capital is a balance sheet figure: current assets less current liabilities.

 

Nope.

Net debt = short-term debt + long-term debt - cash.

Hence, net interest-bearing debt = short-term interest-bearing debt + long-term interest-bearing debt - cash.

 

first off, as always, thank you very much for your input magician.

I thought that Net Working Capital was essentially how much a business has to spend to make a profit, i.e.-- Cost of Sales + Selling, Gen. & Admin. Expenses, etc. (essentially what you subtract from the Gross Sales to get the EBITDA)

my bad... I looked up working capital in investopedia, and you are exactly correct. thanks for the correction.

while we're on the subject, How would you quantify the Net Fixed Assets? I'm going on the assumption that they are the Total Non-Current Assets.

 

hrmm. I'm not understanding the logic behind subtracting cash.

even if I have enough cash on hand to pay off my all my debts, that doesn't mean I will do so immediately, and thus will still be incurring interest charges on said short and long term interest-bearing debts.

I suppose one could assume that one is earning interest on the cash, but it's not likely that enough interest would be earned on the cash-in-hand to offset the interest payments from the money borrowed (except perhaps in the case of a bank, or other investment entity-- I'm just talking about a typical large business entity, like IBM)

 

[QUOTE=tritium_pie,Dec 26 2005, 02:37 PM] hrmm.