How to Read Financial Statements in Millions
Mail Purse: How to Read Big Numbers on Financial Statements
A question about reading numbers on fiscal statements …
My seemingly dumb business administration 102 professor has made what I retrieve is a huge error on grading my terminal midterm, my question is as follows. On a residue sheet that is stated in terms of millions there is the number $74,000 (co-ordinate to her) that number is equal to 74,000,000 dollars. Is this correct? My previous understanding was that $74,000 on a balance sheet in millions would exist equivalent to 74,000,000,000.
[Proper name and University Redacted]
You are right. She is wrong.
The number $74,000 on a fiscal statement expressed in millions is $74,000,000,000, or $74 billion. For future reference, remember:
- Financial statements expressed in millions = Multiply by 1,000,000
- Financial statements express in thousands = Multiply by 1,000
Allow'southward expect at some existent-world examples. We'll starting time with the near valuable publicly traded company in the globe, Apple, Inc. Pulling its most recent 10-K filing with the SEC, nosotros go this:
Notice the disclaimer that figures are "in millions, except number of shares, which are reflected in thousands, and per share amounts".
The $39,510 shown on net income is $39,510,000,000. That is $39.51 billion in internet turn a profit. Apple has a market capitalization of almost $725 billion. That puts information technology at around eighteen.3x last year's earnings.
(If your professor were right, it would have earned merely $39,510,000, or $39.51 million. That would hateful investors are valuing the business at a price-to-earnings ratio of 18,350. Since the last time I checked, hell had neither frozen over nor had pigs begun to fly, she should be able to spot her error if you point that fact out to her. If, God help u.s.a. all, yous are proverb she has already looked at it and insisted her manner is correct, that it wasn't just an honest mistake in a moment of beingness tired, I'd take it to the dean and perhaps even file a formal complaint with the teachers' union. It would exist educational malpractice and a sign she doesn't take a inkling what she is doing. She should non be teaching a course but it'south hard for me to imagine anyone like that having a job, especially at a university with a earth-class reputation like the i you lot attend, because this is basic, fundamental mathematics you learn in fourth grade. It'due south non like she misinterpreted an IFRS or GAAP regulation or something, which might at least be understandable.)
For your ain reference, some companies will short-manus in thousands merely they disclaim this explicitly on the fiscal statements. Permit'southward look at Tiffany & Company, which shows "$181,369" in net earnings. Patently, Tiffany & Company didn't make more than than Apple despite a bigger number on its fiscal highlight page but since it says figures are in thousands, except percentages, per share amounts, and the number of retail stores, nosotros know we have to brand an adjustment, adding simply three zeros, instead of vi. After-taxation profits were $181,369,000, or $181.369 million.
Meanwhile, Investors Title Company, one of the first small companies I could observe on short discover that follows such a do, doesn't abbreviate its income statement at all. The $14,796,738 in cyberspace income is just shy of $14.eight million.
Don't worry. Exist happy. Go get your grade adjusted.
Source: https://www.joshuakennon.com/mail-bag-how-to-read-large-numbers-on-financial-statements/
0 Response to "How to Read Financial Statements in Millions"
Post a Comment