understanding construction financial statements
TRANSCRIPT
January 30, 2014January 30, 2014Presented by Rob Scherer Presented by Rob Scherer
Understanding Construction Understanding Construction Financial StatementsFinancial Statements
Workshop #1Workshop #1
www.teamtag.net
Construction Financial Management Series
• Six-Part Series to Cover Best Practices in Financial Statements, Job Costing, Construction Software and other Critical Accounting Areas.
La Jolla, CA – TAG, Southern California’s leading provider of outsourced accounting and software solutions, along with the San Diego Chapter of the Associated General Contractors (AGC) announced the launch of a six-part series on Construction Financial Management beginning in January 2014.
Robert Scherer, President of TAG will share his financial expertise during each module of the information-rich series. The courses will help building industry executives and finance professionals become more familiar with the best practices and procedures in integral areas such as accounting, budgeting, financial planning, banking, bonding and construction software systems for job costing, project management and tracking.
TAG supports and strengthens your company’s accounting department and management with outsourced bookkeeping, controller, and CFO services.
Whether you are a CFO who could use a quality controller once a week, a controller who needs bookkeeping assistance, or an office manager looking for higher level finance and accounting oversight, TAG can fill the need.
From sales to implementation, training to consulting, TAG’s team of certified consultants work to improve your efficiency and reporting capabilities with the best accounting software for the building industry. TAG is an Authorized Reseller with a team of Certified Consultants for:
• Sage 300 Construction and Real Estate (Timberline)
• Sage 100 Contractor (Master Builder)
• Sage Estimating
• Contractor V
Beyond the Numbers…Beyond the Numbers…
TAG provides valued financial and business resources & counsel for companies and individuals on the move.
January 30, 2014 - Understanding Your Construction Financial Statements
February 27, 2014 - Job Costing & Accounting
March 27, 2014 – Banking & Bonding Management
April 24, 2014 – Tracking your Field Production
May 29, 2014 – Best Practices in Construction Accounting Software
June 26, 2014 – Construction Financial Management Boot Camp
Purpose: Purpose:
The overall purpose of today’s workshop is to review The overall purpose of today’s workshop is to review
the key components of a Construction Financial the key components of a Construction Financial
Statement:Statement:
Balance SheetBalance Sheet
Income StatementIncome Statement
Work-In-ProgressWork-In-Progress
TAG presents at the AGC San Diego ChapterRobert Scherer, President of TAG teaches “Construction Financial Management” series for the Association of General Contractors.
www.teamtag.net
A Balance Sheet is a snapshot of the company’s A Balance Sheet is a snapshot of the company’s Assets and Liabilities valued as of a specific date.Assets and Liabilities valued as of a specific date.
Current Assets
Cash
Accounts Receivable - Trade
Accounts Receivable - Retention
Costs in Excess of Billings (under billings)
Prepaid Expenses
Fixed Assets
Machinery & Equipment
Office Fixtures & Furniture
Field Vehicles
Leasehold Improvements
Less Accumulated Depreciation
Other Assets
Deposits
Other Long-Term Assets
Current Liabilities
Accounts Payable - Trade
Accounts Payable - Sub
Accrued Wages & Benefits
Line of Credit
Current Portion of Long-Term Debt
Billings in Excess of Earnings
Long-Term Liabilities
Long-Term Debt
Less Current Portion
Owner’s Equity
Common Stock
Current Year Income/(Loss)
Retained Earnings
An Income Statement provides a measure of the operating performance of a company for some particular period of time.
Direct Job Costs - Material
Direct Job Costs - Labor
Direct Job Costs – Sub’s
Direct Job Costs - General
Direct Job Costs - Equipment
Indirect Field Costs
Billings and Revenue
General & Administrative
Other (Interest Income/Expenses)
Construction Income Statement ExampleRobert Scherer, President of TAG reviews the use of balance sheets, income statements and work-in-progress reports.
www.teamtag.net
A Work in Progress is an overview of the company’s job activity for the current fiscal year.
A Contractor’s WIP calculates the percentage completion of each job, and provides the under- and overbillings totals entered on the Balance Sheet.
It should also reconcile to revenues and costs on the income statement.
Basic Information From WIP
Costs & Earnings in Excess of Billings (Asset)
Billings in Excess of Costs & Earnings (Liability)
Comparison of Open & Closed Jobs
Backlog of Work
Gross Profit Analysis by Job
Underbillings “Flag”
Comparison of Jobs by Location, Estimator, Project Manager, Division, Type, etc.
KPI’s for Construction Financial Management“Cash is King” Rule of Thumb.
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Current Ratio
Gross Margin % Trends
Indirect Field Cost as a % of Overall Field Cost
Backlog in Months
Cash
Working Capital
Underbillings as compared to Overbillings
Key Performance Indicators
January 30, 2014 - Understanding Your Construction Financial Statements
February 27, 2014 - Job Costing & Accounting
March 27, 2014 – Banking & Bonding Management
April 24, 2014 – Tracking your Field Production
May 29, 2014 – Best Practices in Construction Accounting Software
June 26, 2014 – Construction Financial Management Boot Camp