Amr Bazan

Financial Ratios (Exam-Ready Summary) Financial ratios are numerical tools used to analyze a company’s financial performance and position using figures from the financial statements. Liquidity Ratios Measure the ability to meet short-term obligations. Current Ratio Current Assets ÷ Current Liabilities Quick (Acid-Test) Ratio (Current Assets − Inventory) ÷ Current Liabilities Profitability Ratios Measure the ability to earn profit. Gross Profit Ratio (Gross Profit ÷ Sales) × 100 Net Profit Ratio (Net Profit ÷ Sales) × 100 Return on Capital Employed (ROCE) (Net Profit ÷ Capital Employed) × 100 Efficiency / Activity Ratios Show how well assets are used efficiently. Inventory Turnover Ratio Cost of Goods Sold ÷ Average Inventory Debtors Turnover Ratio Credit Sales ÷ Average Debtors Asset Turnover Ratio Sales ÷ Total Assets Solvency / Leverage Ratios Measure long-term financial stability. Debt-Equity Ratio Long-term Debt ÷ Shareholders’ Funds Proprietary Ratio Shareholders’ Funds ÷ Total Assets Market Ratios Useful to investors. Earnings Per Share (EPS) Profit after Tax ÷ Number of Shares Price–Earnings (P/E) Ratio Market Price per Share ÷ EPS Importance of Financial Ratios Help in decision-making Measure business performance Compare results over time Assist investors and management #financialratio #finance #gossip

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Here is a clear and concise summary of IFRS 10 — Consolidated Financial Statements: ⸻ IFRS 10 Summary IFRS 10 sets out the principles for presenting and preparing consolidated financial statements when an entity controls one or more other entities. ⸻ 1. Objective To define the principle of control, and establish how control determines which entities must be consolidated. ⸻ 2. Definition of Control An investor controls an investee when all three of the following elements are present: a) Power over the investee • The ability to direct relevant activities (i.e., activities that significantly affect the investee’s returns). • Power usually comes from: • Voting rights • Contractual arrangements • Potential voting rights (e.g., options, warrants) b) Exposure or rights to variable returns • Returns can be: • Financial (dividends, interest) • Non-financial (synergies, strategic benefits) c) Ability to use power to affect those returns • The investor can use its power to influence the returns (i.e., power + returns are linked). If all three are met → Consolidation is required. ⸻ 3. Key Principles i. Consolidation Procedures When preparing consolidated financial statements: • Combine assets, liabilities, equity, income, expenses, and cash flows of parent and subsidiaries. • Eliminate intragroup balances and transactions. • Align accounting policies across the group. ii. Non-Controlling Interests (NCI) • Presented within equity, separately from the parent shareholders’ equity. • NCI can be measured at: • Fair value, or • Proportionate share of net assets of the subsidiary. iii. Loss of Control When a parent loses control of a subsidiary: • Derecognize the assets, liabilities, and NCI of the subsidiary. • Recognize any retained interest at fair value. • Recognize a gain or loss in profit or loss. iv. Potential Voting Rights • Considered in assessing control only if substantive (i.e., realistically exercisable). ⸻ 4. Exemptions A parent may be exempt from preparing consolidated financial statements if: • It is a wholly owned subsidiary, or is a partially owned subsidiary with no objections from other owners. • Its securities are not publicly traded. • Its parent prepares public IFRS-compliant consolidated financial statements. ⸻ 5. Structured Entities IFRS 10 addresses “structured entities” (e.g., SPEs). Control assessment focuses on: • Purpose and design of the entity • Rights to direct relevant activities • Exposure to variability of returns Even without voting rights, an investor may control a structured entity. ⸻ 6. Link with Other Standards • IFRS 3: Business combinations • IFRS 12: Disclosure requirements • IAS 28: Associates and joint ventures ⸻ 💡 In Simple Words If a company has power, exposure to returns, and can use that power to influence returns, it must consolidate.

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Understanding IFRS 15: Revenue from Contracts with Customers Revenue recognition is not about when cash is received,it’s about when value is delivered. IFRS 15 introduced a clear 5-step model to ensure revenue is recognized consistently and fairly across industries: 🔹 Step 1: Identify the contract with a customer 🔹 Step 2: Identify the performance obligations in the contract 🔹 Step 3: Determine the transaction price 🔹 Step 4: Allocate the transaction price to the performance obligations 🔹 Step 5: Recognize revenue when (or as) performance obligations are satisfied This framework is especially critical for: ✔ SaaS & subscription-based businesses ✔ Service contracts ✔ Long-term and multi-element arrangements One key takeaway: 👉 Cash received upfront does not automatically mean revenue earned. Unfulfilled obligations create deferred revenue (a liability) until the service is delivered. As an accounting professional, strengthening IFRS knowledge,especially IFRS 15 ,is essential for accurate reporting, audit readiness, and informed decision-making. #IFRS #IFRS15 #Accounting #FinancialReporting #RevenueRecognition #CPA #Finance #ProfessionalDevelopment

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Sharing a simplified flowchart of IAS 40 – Investment Property, covering recognition, measurement, presentation, and disclosure. The standard is critical as it affects financial statements through measurement choices (fair value vs. cost), impacting net profit, balance sheet presentation, and disclosures that enhance transparency for decision makers #IFRS #Financial_Statements #Finanial_Reporting #Accounting

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📊 Core Elements of Financial Statements under IFRS 🧾 Understanding the elements of financial statements is fundamental to interpreting and preparing financial reports. The IFRS Conceptual Framework clearly defines each element and its role in presenting a true and fair view of an entity’s financial position and performance. 🔹 Assets A present economic resource controlled by the entity as a result of past events. 🔹 Liabilities A present obligation of the entity to transfer an economic resource as a result of past events. 🔹 Equity The residual interest in the assets of the entity after deducting liabilities. 🔹 Income Increases in assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from holders of equity claims. 🔹 Expenses Decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to holders of equity claims. These definitions aren't just academic — they form the basis for recognition, measurement, and presentation of all financial transactions. 💡 Whether you're an accountant, analyst, or finance leader, knowing these five pillars is essential for sound financial judgment and reporting. #MakeLifeBeautiful #IFRS #AccountingBasics #OpenToWork #hiring #FinancialReporting #IFRSEducation #ConceptualFramework #IFRS2025 #AccountingProfessionals #FinanceCareer #CMA #DipIFRS #GlobalFinance #GAAPvsIFRS

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Understanding IFRS in the UAE: The Standard for Transparent Financial Reporting. In the United Arab Emirates, financial reporting is governed by International Financial Reporting Standards (IFRS) — a globally recognized framework issued by the International Accounting Standards Board (IASB). These standards ensure transparency, consistency, and comparability across businesses, strengthening investor trust and global credibility. 📊 Who Must Follow IFRS? All listed companies on UAE stock exchanges (DFM, ADX, NASDAQ Dubai) must prepare financial statements under IFRS. Most private companies and free zone entities also adopt IFRS to maintain compliance and attract investors. 🏛️ Regulatory Oversight: The Ministry of Economy (MOE) and Securities and Commodities Authority (SCA) oversee financial reporting compliance. The Central Bank of the UAE mandates IFRS for all banks and financial institutions. ⚖️ No Local GAAP: The UAE does not have a separate local accounting standard. IFRS serves as the national accounting framework, ensuring alignment with international best practices. 📘 Key IFRS Standards Commonly Applied IFRS 15 – Revenue from Contracts with Customers IFRS 16 – Leases IFRS 9 – Financial Instruments IAS 1 – Presentation of Financial Statements IAS 12 – Income Taxes IAS 16 – Property, Plant, and Equipment 🏢 Free Zone Compliance: Free zones such as JAFZA, DMCC, and DIFC require IFRS-compliant financial statements for license renewals and audits. The DIFC specifically mandates IFRS for all registered entities. 🔍 In Summary: IFRS is the official accounting standard framework in the UAE, ensuring financial transparency, investor confidence, and alignment with global reporting standards. ▪️▪️▪️ #IFRS #UAEFinance #AccountingStandards #FinancialReporting #DubaiBusiness #UAECompanies #Transparency #InvestorConfidence #FinanceProfessionals #BusinessCompliance

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How to perform the annual year-end closing (Accounting Process) using IFRS concepts: ⸻ 1️⃣ Review and finalize all transactions • Ensure all revenues and expenses related to the year are recorded • Verify journal entries and supporting documents • Reconcile: • Bank accounts • Accounts receivable • Accounts payable ⸻ 2️⃣ Record year-end adjustments Prepare adjusting entries for: • Accrued expenses • Accrued revenues • Prepaid expenses • Deferred (unearned) revenues • Depreciation of fixed assets • Provisions (doubtful debts, EOSB, inventory provision)

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📘 IFRS 18 – Presentation and Disclosure in Financial Statements Post credit: Mohammad Rizwan IFRS 18 will reshape how profit or loss is presented — and for CFOs, 2027 is not far away. That’s why I’ve created a 76-page CFO Guide on IFRS 18 (Part 10 of the series), focused on practical impact, not theory. 📘 What this CFO Guide covers: • 🧭 A clear transition roadmap to 2027 — and why 2026 is critical • 📊 The new profit or loss structure, explained simply • 🔍 Practical breakdown of Operating, Investing & Financing categories • 📐 Real-world implications of Management Performance Measures (MPMs) • 🧾 Expenses by nature disclosures — what’s required and why it matters • 🧩 Aggregation vs disaggregation — avoiding hidden material information • ❓ Key questions CFOs should be asking now ⏳ If you’re a CFO, waiting until 2027 is already late. Early preparation will define the quality of reporting, investor communication, and internal performance metrics. This post concludes my IFRS 18 series — but for finance leaders, the real work starts now. 👇 If you’d like the full 76-page CFO Guide presentation on IFRS 18, comment “IFRS 18”. #IFRS18 #CFO #FinancialReporting #FinanceLeadership #IFRS #AccountingStandards #FPandA #CorporateFinance 📊

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Accrual vs. Cash-Based Accounting – Which One Works Best in Saudi Arabia? 🇸🇦 Whether you're a finance professional or a business owner, understanding how your expenses are recorded is key to staying compliant and making smarter decisions. 💼 Accrual-Based Accounting ✔ Records income & expenses when earned/incurred, not when paid ✔ Provides a clearer picture of financial health ✔ Mandatory under IFRS, which is followed by ZATCA in KSA ✔ Ideal for growing businesses, VAT compliance, and audits 💰 Cash-Based Accounting ✔ Records income & expenses only when cash changes hands ✔ Simpler for small businesses ✔ Focused on cash flow, but lacks full visibility into financial position 📌 In Saudi Arabia, accrual accounting is often the better (and required) choice—especially for companies registered for VAT, or those preparing for audits and regulatory filings. 💡 My take? Start simple, but scale with structure. As your business grows, accrual becomes not just a smart choice—but a compliance necessity. #Accounting #Finance #SaudiArabia #KSA #ZATCA #VAT #AccrualAccounting #CashAccounting #IFRS #SmallBusiness #LinkedInFinance

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Best Practice Handbook for Accounts Receivable A practical guide to streamlining and improving the accounts receivable (AR) process for businesses. It breaks down the AR journey into three main stages: issuing invoices, receiving payments, and recording collections.

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✅ Post 36 – Trend Analysis Applications #Post_36 #Trend_Analysis #Accounting_Tools #Data_Interpretation #Basel_Nema 3️⃣6️⃣ Trend Analysis in Financial Statements – Part 2 Now that we know the concept, let’s apply it in real scenarios 💡 🔹 1. Revenue Trend Example 📘 Data: 2021: 900,000 2022: 1,050,000 2023: 1,200,000 📌 Trend: 2021 = 100% 2022 = 116.7% 2023 = 133.3% 💡 Interpretation: Consistent growth of around 16% annually → Healthy revenue improvement 📈 🔹 2. Expense Trend Red Flag 📘 Operating Expenses: 2021: 400,000 2022: 470,000 2023: 610,000 📌 Trend: 2022 = 117.5% 2023 = 152.5% ⚠️ Interpretation: Operating costs are rising faster than revenues — a major red flag for profitability. 🔹 3. Key Takeaways for Interpretation 💡 Tips: Compare trends (revenue vs. costs vs. assets) Watch for diverging paths (e.g., rising costs with stagnant income) Don’t rely only on positive % — check the margins too Always consider external factors (inflation, regulation) 🔹 4. UAE Business Use Cases 📌 Where trend analysis supports: Bank credit analysis Internal operational KPIs Audit reports Strategic decisions on pricing or expansion 📌 It’s not about the number — it’s about the direction. 🔗 Follow for expert-level financial tools 🔗 Basel Nema

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Accounting and finance are not just about numbers—they are about trust, transparency, and accountability. Every financial report tells a story about how an organization manages its resources and fulfills its responsibilities to stakeholders. As auditors, our role is to review these records carefully, ensure that financial statements are accurate, and confirm that companies follow established accounting standards and regulations. Auditing also helps organizations identify risks, improve internal controls, and strengthen financial management. By examining transactions, testing processes, and asking the right questions, auditors help protect organizations from errors, fraud, and financial misstatements. Ultimately, strong accounting and effective auditing build confidence among investors, management, and the public. When financial information is reliable and transparent, it supports better decision-making and long-term financial stability.

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📘 IFRS 15 – Revenue from Contracts with Customers Objective: IFRS 15 provides a single, principles-based framework for recognizing revenue. It replaces older standards (IAS 18 and IAS 11) and ensures that companies report revenue in a way that reflects the transfer of goods or services to customers. Key Principles: • Identify the contract with a customer. • Identify performance obligations (distinct goods or services). • Determine the transaction price. • Allocate the transaction price to performance obligations. • Recognize revenue when (or as) performance obligations are satisfied. 🔎 Situations Where IFRS 15 is Used • Sale of goods: A retailer selling electronics recognizes revenue when control of the product passes to the customer. • Provision of services: A consulting firm recognizes revenue over time as services are delivered. • Construction contracts: A construction company recognizes revenue progressively as milestones are achieved, rather than only at completion. • Software licenses: Revenue is recognized depending on whether the license is for a point in time (e.g., one-time purchase) or over time (e.g.,

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VAT- Saudi Arabia Value added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain from the production to the point of sale. End consumer generally bear the VAT cost. In Saudi Arabia introduced 5% VAT on January 2018 and increase to 15% from 01 July-2020. VAT Registration a) Mandatory Registration: A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of SAR 375,000. * The total value of its taxable supplies and imports exceeds the mandatory registration threshold over the previous 12 months, or * The business anticipates that the total value of its taxable supplies and Import will exceed the mandatory registration threshold in the next 30 days. b) Voluntary Registration: A business may choose to register for VAT voluntarily where the total value of its taxable supplies and imports (or taxable expenses) is in excess of the voluntary registration threshold of SAR 187,500. * The total value of its taxable supplies and imports or taxable expenses in the previous 12months exceeds the voluntary registration threshold, or * The business anticipates that the total value of its taxable supplies and import or taxable expenses will exceed the voluntary registration threshold in the next 30 days. VAT Returns and Payment. a) Monthly VAT Returns: A Businesses must file monthly VAT returns if their annual taxable supplies exceed SAR 40 million. Returns must be filed and paid to the Zakat, Tax and Customs Authority (ZATCA) by the last day of the month following the end of the tax period.(The Month of Jan-25 should be filed and paid Feb-25 last) b) Quarterly Return: A Businesses with annual taxable supplies less than SAR 40 million file quarterly returns. Returns are due within 30 days after the end of each tax quarter.( Q1: January–March (deadline by April 30)). Types of Supplies: a) Standard Rated Supplies : A standard-rated supply is a taxable good or service for which a country's standard rate of Value Added Tax (VAT) is charged. b) Zero rated Supplies: A zero-rated supply is a good or service that is taxable under Value Added Tax (VAT) , but at a rate of 0%. c) Exempt Supplies: An exempt supply refers to the sale of certain goods and services that are not subject to Value-Added Tax (VAT). Input Tax: VAT that a registered business pays on goods and services it purchases for its commercial activities. which it can then subtract from the VAT it collects from customers (Input Tax Credit) Output Tax: VAT that a registered business charges and collects from its customers when it sells goods or services. VAT Payable: It is calculated by subtracting the VAT a business has paid on its own purchases (input VAT) from the VAT it has collected from its customers on sales (output VAT).

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VAT and ZATCA in KSA Calculation

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👌 When evaluating a company's continuing solvency using the statement of cash flows, cash flows from operating activities are indeed the most important factor to consider. #accounting #cma_p1

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