Info 1: net changes definition
Info 2: how net changes work
Info 3: net changes vs net loss
Info 4: example of net changes
Opening information:
Net changes sentence breaks into two words net and changes, net final things after all the deduction, changes means not fixed item.
Net changes mean modifying from the final amount the all deductions.
So now let’s have a look at what is net change, how net changes work in the public market, and what is the difference between net changes and net loss, finally one clear example of net changes.
Info 1: Net changes definition
Mr.Nethil is an entrepreneur who run the textile business for almost 24 years, where he holds about 34 percent of the company.
In this current quarter, Nethil’s business had added 75 million dollars with last year’s business cash, so its company cash holding would increase by 75 million more.
And textile Industry paid about 13 million dollars as dividends to their all Shareholders. However, this dividend payment and 75 million dollars increase came from the net income of 145 million dollars.
Dividends and increases in the holding would rise and fall based on the future performance of the company.
Here the 75 million dollars that’s added to the previous cash holding in Mr.Nethil business is what is named as net changes.
Any business that reports an increase or decrease in the holding cash asset of the previous year in the company is called a net change of the industry.
If the certain business won’t have any amount of changes in the previous year’s cash and cash equivalent assets, which are shown as zero changes in net.
Moreover, this same concept would be applied to all public Corporations, so let’s dive into how the net changes work in the public market.
Info 2: how net changes work
Net changes don’t represent any of the specific objects or things instead they are accounted terms that are used to identify the changes from the previous number to the current number.
Any of the net changes identification wouldn’t apply to one thing instead it applies to complex contexts and matters of business.
When one previous year’s price or amount couldn’t be changed after the current or one year’s, it doesn’t mean there are no net changes from the years, instead, it’s mentioned as zero or negative number if the chart moves negatively.
Any of the businesses that record the income in the profits and loss statement of the company would also record and account for them in a Cash flow statement of the Industry.
Such cash flow statements are constructed through three things, operating income, investing income, and the financial income of one Industry.
This income would be positive or negative when it’s summed together by subtracting any expenses using all kinds of income. Lastly, the income what added to last year’s cash which is the hold of any business.
Using the last year holding cash from one business and over the current year adding or subtracting income is what demonstrates a net change of one Industry.
At the same time, net changes are also elaborated in the technical analysis of the chart by comparing the last day’s share price closing time and the Current day’s share price closing time.
The number identified between the two trading closing times by subtracting the old share closing price from the new closing share price would state the net changes of one share price.
So the net changes would be changeable in every day in share price and each quarter in real business. Most people confuse net changes and net loss. So let’s jump into knowing the key difference in it anyway.
Info 3: net changes vs net loss
The difference between the net changes and net loss is, that net changes refer to the final amount without any deductions to add or subtract using the previous number.
On the other side, net loss also refers to the final amount by loss after all the deductions from one operation, but the net loss doesn’t represent the profit number at the end.
To make you more clear about the net changes, let’s look into one brief example below.
Info 4: example of net Changes.
Say company D is the one that reports the two things in two different years in a cash flow statement.
In one year it is money that provides the 13 million dollars in income changes to the previous cash. And other year it’s stated the things of money which made a change of -10 million dollars.
Here the two years mention the net changes but the other year’s -10 million dollar changes only refer to the net loss because net changes would be negative positive or neutral.