1 © NOKIA Venture Cup_Profitability / January 2003 / Jonne ...
description
Transcript of 1 © NOKIA Venture Cup_Profitability / January 2003 / Jonne ...
1 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Profitability
January 29, 2003Jonne Hankimaa
Director Finance&Control
Nokia Mobile PhonesVENTURE CUP 2002/2003
2 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
• Financial Statements
• Profitability
• Follow-up
Content
3 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Financial Statements
1) Profit and Loss Statement
2) Balance Sheet
3) Cash Flow
4 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Payments
Products/ Systems
Payments
Work
DividendsInterest
Components
Salaries
Share capitalCapital investment
Personnel
CustomersSubcontractors
OwnersBankers
Money flows
Material flows
Material and Money Flows
5 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Financial Statements
•Profit and Loss Statement – history
•Balance Sheet – today•Cash Flow - future
•Change in one, means changes in the others = double entry bookkeeping
6 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Profit and Loss Statement
• Measures and reports profit generated during a certain period
•revenues•costs
•salaries•materials•variables•fixed
• Profit/ loss is more or less an opinion
7 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Balance Sheet
•What is the value of the company at a certain point of time?
•What did the value consist of - how were assets financed?
•What is the company´s risk level?•Debt/Equity•Assets usage•Sales receivables• Inventories
8 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Cash Flow
•“Profit is a matter of opinion - Cash Is the King”
•eliminates effects of judgements/ valuations/ periodisations in Profit& Loss Statement and Balance Sheet (accounting principles)!
•what happened during the period in cash terms?
•How well are assets managed?
•What are financing needs?
9 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Profit and Loss Statement, Balance Sheet and Cash Flow
Profit and Loss
Statement
PROFIT/LOSS OFTHE PERIOD
- SALES- COST STRUCTURE
Balance Sheet
SNAPSHOT OFASSETS AND LIABILITIES
- PRODUCT OF THE HISTORY- MUSCLE FOR THE FUTURE
€INCOMEFINANCE CHANGES
CASH FLOW
€
10 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
• Profit&Loss Statement
• Lifecycle Profitability
• Trade-off
Profitability
11 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Profit & Loss Statement
* NET SALES
- COST OF GOODS SOLD
* SALES MARGIN
- FIXED COSTS
- DEPRECIATION
* OPERATION PROFIT+/- OTHER INC. AND EXPENSES INTEREST (Capital Charge)
* NET PROFIT (Before Taxes)
12 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Lifecycle Profitability
products contribution
time
€
product creation sales
0
13 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Graph Example
-20
-10
0
10
20
30
40
50
60
Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
Vo
lum
e
Cumulative Volume Volume Cumulative Contribution
Total Sales Volume
Total Net investment into project
Break Even Point (in Time)
Break Even Point (in Volume)
Cumulative Sales Volume Development
Total Contribution
Quarterly Sales Volume
Development
Peak Sales Volume
Total Time on the market
Cumulative Contribution Development
€
14 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Why lifecycle calculations?
PROGRAM PHASE
Concept Development Production Ownership
100
50
0
Saving potential
Cost commitment
Percentage ofLife Cycle Cost
15 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Time
Development cost
Product cost
Performance
Trade-off
16 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
• Statement for Business Measures
• Balance Scorecard
• Key Ratios
Follow-up
17 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Provide a systematic approach for identifying, collecting
and sharing holistic, yet focused strategic performance
information (financial & non-financial) and for setting and
communicating aligned targets derived from the critical
success factors and strategic objectives to enable continuous
improvement and learning.
Business Measures
Focus attentionFocus attention
Drive for continuous improvement Drive for continuous improvement
Enable target settingEnable target setting
Boost strategy implementationBoost strategy implementation
Push fact based managementPush fact based management
18 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Balance Scorecard
CommoCommonn
measurmeasure e
definitidefinitionon
ScorecardScorecard
Measure 1 Measure 1
Measure 2Measure 2
Measure NMeasure N
Business Business decisiondecision
Business OwnerBusiness OwnerBusiness OwnerBusiness OwnerScorecard Scorecard CoordinationCoordinationScorecard Scorecard
CoordinationCoordination
Measure Measure OwnerOwner
Measure Measure OwnerOwner
MeasureMeasureValuesValues
MeasureMeasureValuesValues
19 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
There is a need for multiple perspectives
Is one perspective enough to describe all the dimensions
well enough?
Can you get a more holistic view by looking at the dimensions from
multiple angles?
?
20 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Examples of Key Ratios
Efficiency
Net Working Capital -Inventory, Receivables,
Liabilities
Solidity
Equity RatioGearing
Liquidity
Quick ratioCurrent ratio
Profitability
Operating ProfitNet Profit
RONA
21 © NOKIA Venture Cup_Profitability / January 2003 / Jonne Hankimaa
Thank you