1. Calculate Financial Position
Principles of Cost Analysis and Management

2. Why is it useful to know an entity’s financial position?

3. Terminal Learning Objective
Action: Calculate Financial Position
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy (70% for international students) you must:
Define / Explain Financial Position
Demonstration problem – Classify Assets and Liabilities
Reporting Financial Position

4. Meet the Simmons Family
Gomer, Madge and kids:
Bert, Lacy and baby Maddie
Stunt doubles for a popular cartoon family
Task: Calculate the family’s Financial Position

5. What is Financial Position?
Financial position is represented by the equation:
Assets – Liabilities = Financial Position Or
Assets = Liabilities + Financial Position
Financial Position may also be called Equity or Net Assets

6. What’s an Asset? An Asset is: What kinds of assets might the Simmons
Something you OWN
Represents FUTURE BENEFIT
What kinds of assets might the Simmons
What kinds of assets might the Simmons family own?
ilywn
OWN
FUTURE BENEFIT

7. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM ______against your assets
What kinds of Liabilities might the Simmons family have?
OWE
FUTURE SACRIFICE
CREDITOR’S CLAIM
What kinds of Liabilities might the Simmons family have?

8. LSA #1 Check on Learning
Q1. What is the equation to represent financial position? A1. Q2. Which element of the equation represents future benefits of the entity? A2.
Q1. What is the equation to represent financial position?
A1. Assets – Liabilities = Financial Position Or
Assets = Liabilities + Financial Position
Q2. Which element of the equation represents future benefits of the entity?
A2. Assets

9. LSA #1 Summary
For this learning step, we spoke of the Simmons Family Budget and covered some basic acronyms such as assets and liabilities.

10. Sorting the Data Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth

11. Sorting the Data (Cont.)
Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth

12. Sorting the Data (Cont.)
Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth

13. Classifying Assets & Liabilities
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (Bank + purse) Total $240,077.47
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total $230,750
Financial Position or Net Worth =
$240, $230,750 = $9,327.47

14. Graphic Solution

15. LSA #2 Check on Learning
Q1. Which of the following would be considered a liability: Checking account $327; Credit card account $246; Groceries $50 A1. Q2. Assuming these are the only relevant items, what is the financial position? A2.
Q1. Which of the following would be considered a liability: Checking account $327; Credit card account $246; Groceries $50
A1. The Credit Card account is the liability
Q2. Assuming these are the only relevant items, what is the financial position?
A2. Checking account 327 – credit card account 246 = financial position $81

16. LSA #2 Summary
In this activity, we discussed the classification of assets and liabilities, used several examples with formula(s) and a graphic representation.

17. Reporting Financial Position
The Statement of Financial Position presents the financial position of a government entity as of a SINGLE DATE.
May also be called:
Balance Sheet (for-profit entity)
Statement of Net Assets (not-for-profit entity)
Statement of Net Worth (individual or family)

18. Statement of Financial Position
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (Bank + purse) Total $240,077.47
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total Liab. $230,750 Net Worth 9, Total $240,077.47

19. LSA #3 Check on Learning
Q1. What is the name of the report that presents a government organization’s financial position? An individual’s? A1. Q2. What is the time frame of this report? A2.
Q1. What is the name of the report that presents a government organization’s financial position? An individual’s?
A1. Statement of Net Assets / Statement of Net Worth
Q2. What is the time frame of this report?
A2. A single day

20. LSA #3 Summary
During this block, we discussed that the Statement of Financial Position has different names depending on the entity.

21. Practical Exercise

22. Financial Position Spreadsheet
Enter data in the white spaces

23. Financial Position Spreadsheet (Cont.)
Use Tabs to Navigate

24. Financial Position Spreadsheet (Cont.)
The spreadsheet uses the data you entered to produce the Statement of Financial Position and the pie graph

25. Practical Exercise

26. TLO Summary Action: Calculate Financial Position
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy (70% for international students) you must:
Define / Explain Financial Position
Demonstration problem – Classify Assets and Liabilities
Reporting Financial Position