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| {{accounting}}
| | Hi there, I am Felicidad Oquendo. Bookkeeping has been his day job for a while. One of the things I love most is greeting card gathering but I don't have the time recently. Delaware is our beginning place.<br><br>My website ... [http://calvaryhill.net/xe/board_DsjO50/23803 car warranty] |
| The '''financial result''' is the difference between [[earnings before interest and taxes]] and [[earnings before taxes]]. It is determined by the earning or the loss which results from financial affairs.
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| == Interpretation ==
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| For most industrial companies the financial result is negative, as the interest charged on borrowing generally exceeds income from investments (dividends). If a company records a positive financial Result over several periods, then one has to ask how much capital is invested at which interest rate, and if this capital would not bear a greater yield if it were invested in the company's growth. In case of constant, positive financial results a company also has to deal with increasing demands for special distributions to its shareholders.
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| == Calculation formula ==
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| In mathematical terms financial result is defined as follows:
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| <math> \textstyle{\begin{align}\mbox{Financial result } & = \mbox{ Interest income} \\ & - \mbox{ Interest expense} \\ & \pm \mbox{ Write-downs/write-ups for financial assets} \\ & \pm \mbox{ Write-downs/write-ups for marketable securities} \\ & + \mbox{ Other financial income and expenses}\end{align}}</math> | |
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| == Advantages ==
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| The advantages of the use of financial result as a [[key performance indicators|key performance indicator]]
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| * The financial result provides information about financing costs.
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| * Information may be gained about non-consolidated companies.
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| financial result =
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| + interest income
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| - interest expenses
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| +/- write up and write down for financial assets
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| +/- write down and write up for marketable securities
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| +/- other financial income and expenses
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| == Disadvantages ==
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| The disadvantages of the use of financial result as a [[Key performance indicators|Key performance indicator]]
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| * Operating components may be included in the financial result (e.g.: the income from financing activities).
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| * Investment income as a component of the financial result does not provide any information on the risk inherent in this investment.
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| * The financial result may vary strongly over time.
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| == References ==
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| * Wiehle, Ulrich, Henryk Deter, Michael Rolf, Michael Diegelmann, Peter Noel Schomig. ''100 IFRS Financial Ratios'' (Cometis AG), 2005, ISBN 978-3-9809461-7-9
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| [[Category:Financial terminology]]
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| [[Category:Financial ratios]]
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| {{finance-stub}}
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Hi there, I am Felicidad Oquendo. Bookkeeping has been his day job for a while. One of the things I love most is greeting card gathering but I don't have the time recently. Delaware is our beginning place.
My website ... car warranty