clicker questions are not to be recorded, they will be reused
Annual Financial Statements are not publicly available in China
Assets > Short-term Investments → bonds, shares
Liabilities > Provisions → rather sure that you will pay something in the future (court case)

constraint in financial accounting under IFRS
- cost-benefit:wontfix what is this?
impairment vs write-off
- book value of an asset is decreased through depreciation
- a sudden and unexpected event happens → impairment
  - impairment would be checked at end of year
- the act of adjusting the books → write-off
depreciation only on non-current assets, current assets might experience impairment tho
operating result: EBIT, not EBITDA → EBIT
- definitely not the operating cash flow
profit in books does not mean positive cash flow → they can be all receivables

TikTok

Sales in just US is 16 Billion USD
ByteDance: owning company of TikTok
ByteDance made 120 Billion in global revenue (+40% from previous year)
- impressive increase, especially at this scale
Meta made 135 Billion USD (only +16% from previous year)
ByteDance declined to comment on financial data → private company
- publicly held = listed on stock exchange, privately held = not listed
TikTok remains unprofitable → huge sales, yet no profit
- strong focus on growth → investments lower profit
- similar to if not purely R&D costs
- any profit distribution does not effect profit itself
China “firmly opposes” any forced sale of TikTok

Some more Henkel

conference call of CEO + CFO with investors and analysts
explaining what happened last year and what is planned for this year
- 4.2% organic sales growth
- battery production
- plans to divest underperforming 350 Million EUR until end of 2024
  - underperforming … not meeting profit margin of 12%
free cash flow … cash which can be used for anything → Hierarchy of Financing
- financing which is not bound to any agreement
- e.g. when taking out a loan the bank wants to know what this money will be used for, your money you can used for ANYTHING

Profit and Loss Statement = Income Statement, they are the same
EBIT: operating result
PBT: profit before tax
(N)PAT: profit after tax
cost of sales … directly attributable costs + plant/equipment overhead
- materials
- salaries
- depreciation
expenses by nature → materials, salaries, depreciation
expenses by function → cost of sales, marketing, R&D, etc
Example - Shoes

Revenue Recognition
back to Henkel → only when Henkel has done everything they need to do to complete a sale i.e. delivered all the goods, etc
- just a contract is not enough
- just hopeful thinking is not enough
sales is often toyed with quite intensely
if it is likely that products will be returned (e.g. due to poor quality) then the share of sales is not included in the sales figure
- true for spikes (new production launch regarding 40% sales)
- true for everyday business (e.g. 1.5% of products are returned)
back to Henkel → adjusted EBIT. What is that?
- “adjusted” includes the restructuring during the merger of “detergents” and “care” into “consumer brands”
- “adjusted” includes one-time costs of leaving Russia this year
- message to investors → why the figures are so low
- Restructuring = firing people and external contractors

Trirangular Relationship
how do companies calculate the operating cash flow?
- Indirect Method
- direct approach would mean to have a second set of books for all cash transactions
Inventory
Expenses
Evaluation of Assets
Assets
Depreciation
Bad Debt
- the debt is impossible to be payed back (bankruptcy) → this is gone → write-down
  - trade receivable is not being payed back → expense
- the debt is unlikely to be payed back (e.g. customer not responding to warnings) → re-asses receivable
  - find out what is the probability that it is not payed back