Understanding our finances
To understand our finances, it is important to understand the relationship between income, cash flow and balance sheet.
Statement of income
The statement of income is broken down according to function, making responsibility for each profit level clear. Managers with operational responsibility can easily see what is expected of them and concentrate on the factors they can affect. Gross margin and operating margin are key indicators, and used in reviewing operations at both divisional and Group level. Amortization of acquisition-related intangible assets, acquisition-related costs, financial items and taxes are monitored separately.
Statement of cash flow
In principle, operating income should generate the same amount of cash fl ow from operating activities over time. The cash flow is affected by investments in non-current tangible and intangible assets used in operations and by changes in working capital. Cash flow from operating activities is an important indicator at operational level. It is defi ned as operating income less investments in non-current tangible and intangible assets (including equipment for solution contracts) plus reversal of depreciation, change in trade receivables, change in operating payables and change in other net working capital.
Balance sheet
Securitas uses the terms "capital employed" and "financing of capital employed" to describe the balance sheet and financial position. Capital employed consists of operating capital employed plus goodwill, acquisition-related intangible assets and shares in associated companies. Operating capital employed, which consists of operating non-current tangible and intangible assets and working capital, is continuously moni tored at the operating level to avoid un-necessary tied-up capital. Capital employed is financed by net debt and shareholders' equity.
