Main financial documents

January 07, 2020

As a publicly listed company and required by the Indonesian Companies Act (Government of Indonesia, 1896), Umbrella’s directors are responsible for the preparation of statements that give a true and fair financial view following International Financial Reporting Standards (IFRS). As per law, an external auditor is also engaged to certify this work and obtain reasonable assurance that financial statements are free from misstatement. The management, with these documents, proves shareholders how their money is invested.

Financial documents

Income Statement

Shows the profit generated by Umbrella during 2001. The profit is determined by taking all revenues and subtracting all costs. Umbrella, as a gaming operator, can be defined a retail business as its products are directly offered to end users. At the same time, given the size of the company and the fact it runs on its own technology platform, the company is also his own service provider. Umbrella’s platform is mainly composed by software that for its nature is an intangible asset. Considered this situation, it is no surprise to find, from a look at the income statement, that main expenses for Umbrella are the marketing cost and the employee cost.

Balance Sheet

Lists the values of Umbrella’s assets and liabilities at the end of 2001. Main company’s assets are goodwill and other intangibles such as development costs, computer software, customer databases, gaming licences and brands. From the same documents it is possible to understand the equities and liabilities.

Cash flow statement

Gives details on Umbrella’s cash position at the end of 2001. It is a fundamental reporting tool for managers, investors, and creditors because it demonstrates if a business has done well or not over a given period. Cash flow refers to the movement of cash and cash- equivalents into or out of a business, project, or financial product.

From these 3 documents we can clearly understand that 2001 was a very negative year and we can see that from a decreased value of retained earnings together with a substantial increase of borrowing and lease liabilities in the Balance Sheet. On top of this, from the Income Statement, we can see that the profit generated during 2001 is 55% lower than 2000. In short, costs increased while profit didn’t follow the same trend. This was a very dangerous situation that required a rapid reaction and strong cost reduction and policy.

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Written by Claudio Maccari . Passionate developer and former windsurfer. You can read more about me here