Course management system and organization

Course Management System and Organization

The balance sheet and the income statement are the starting points for analyzing the economic and financial situation of a company. Based on these, a series of techniques derived from the ratios of the so-called "balance sheet analysis" are applied. However, these techniques have certain particularities in their preparation and interpretation when applied to construction companies.

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Economic-Financial Analysis:

To analyze the economic and financial situation of a company, its financial statements—balance sheet and income statement—can be used as an information system.
This analysis applies a series of techniques largely based on the ratios found in various manuals on the so-called "balance sheet analysis." These techniques have specific nuances in their preparation and interpretation when applied to construction companies.
The study of these nuances is precisely the focus of this article.

The balance sheet of a company can be fundamentally defined as the document representing its financial and equity situation at a given time.
It can also be considered that the balance sheet reflects, in addition to the equity and financial situation, the company's results for the relevant period.

Another acceptable perspective is that the balance sheet is the document that shows the sources of financing available at a given time, coming from both third parties and the company's owners, as well as how that financing has been utilized. In other words: when examining the structure of a balance sheet, we see in its assets the capital in operation (investments) and in its liabilities the sources that financed those investments. Therefore, it is essential to interpret the balance sheet as a document that expresses the following at a given time:

• In assets: investments.
• In liabilities: financing.

Under this basic conception of the balance sheet, we will focus on its arrangement according to financial criteria. To do this, the assets (investments) are classified based on their degree of financial immobilization or liquidity, and the liabilities (financing) are classified according to their enforceability and maturity.

Financial Arrangement Framework:

Assets (Investments) - Classification criterion: Liquidity

1. Fixed assets:

   • Tangible fixed assets.
   • Intangible fixed assets.
   • Financial fixed assets.
   • Amortizable expenses.
   • Negative results.

2. Current assets:

   • Inventory.
   • Short-term receivables (assets convertible into cash within a year).
   • Cash (liquid assets).

Liabilities (Financing) - Classification criterion: Enforceability and maturity

1. Fixed liabilities:

   • Non-enforceable (equity).
   • Long-term liabilities (debts with maturities exceeding one year).

2. Current liabilities:

   • Short-term liabilities (debts maturing within a year).

Considerations for Construction Companies Regarding Provisions:

• Provisions for depreciation and insolvencies will be deducted from their respective assets.
• Provisions for compensation and project completion, as well as for other operating activities generating liabilities, will be included in short- or long-term liabilities as appropriate.
• Provisions for project losses, if applicable, are recommended to be included in non-enforceable liabilities.
• Provisions for projects in foreign countries with non-convertible currencies are also recommended to be included in non-enforceable liabilities.
• Provisions for risks and expenses will be classified as enforceable liabilities in the short or long term, as appropriate.

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