Comment, question or quotation of the day

23-08-2019 : Question asked on the website

In the cash flow statement, should dividends be taken from the results of the previous financial year but paid in the current financial year, or should the amount of dividends decided in the AGM but paid in the following financial year be taken?   In principle, in a cash flow statement, cash flows are taken into account when they are received or disbursed and not when they are generated. Thus, in the 2018 cash flow table, we will see the dividend paid in 2018, i.e. the dividend linked to the 2017 net income and not the dividend linked to 2018 net income, which will appear in the 2019 cash flow table.   If necessary, review Chapter 5 of the Vernimmen.   Have a nice day.

21-08-2019 : Question from a reader

Regarding the calculation of the return on equity, can you tell me:   - Which result should be used in the numerator (the consolidated result or the group share of the consolidated result)?   - What amount of equity capital at the denominator (group share equity or total equity)?       There is a principle of double coherence    The first consistency is between the numerator and the denominator. Either they are both group share or they are both global. But we cannot have net income group share/overall equity because it would be like comparing pears and apples.   The second consistency is related to the use made of the return on equity. In most cases, ROE is calculated to compare it with ROCE. Since ROCE is necessarily global, without distinguishing the share of minority interests in the group‘s operating result, the return on equity is then necessarily the return on total shareholders' equity Have a good day


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The Letter

Number 121 of July 2019

News : Interview with the Finance Director of a listed biotech company

Statistics : Capital structure of different sectors 2008-2018

Research : Cash over the very long term

Q&A : Riddles for the summer

COMMENTS : Comments posted on Facebook