1 / 6

M1: Financial Statements

M1: Financial Statements. BS/IS/CF—know accounts that go on each Regulatory environment Return on Equity/Return on net operating assets Assets = Liabilities + Owners’ Equity. M2: Financial Statements and Transactions. Balance Sheets Financial statements are stratified into sections

Download Presentation

M1: Financial Statements

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. M1: Financial Statements • BS/IS/CF—know accounts that go on each • Regulatory environment • Return on Equity/Return on net operating assets • Assets = Liabilities + Owners’ Equity

  2. M2: Financial Statements and Transactions • Balance Sheets Financial statements are stratified into sections • CA/LT Assets • CL/LT Liabilities +Contrib Cap + Ret. Earnings • Operating assets/Financial Investments • Income Statement: Revenues/Expenses • Revenues—recognized when earned & realizable • Expenses—recognized when incurred • Cash Flow Statement: • Cash flow from Operations==Income+non-cash expenses+change in current operating assets and liabilities • Cash flow from investing—purchase/sale of non-current assets/investments • Cash flow from financing—debts and stock • Add beginning cash to get ending cash • Retained earnings=beginning RE+income-dividends • Know how to work with basic transactions

  3. M4: Analyzing Financial Statements page 4-11 formulae • ROE=NI/OE= • ROE=Operating Return + non-operating Return=RNOA+NOR • Operating Income =Revenues-operating expenses • Take this after tax to get NOPAT • NOA=Net Operating Assets=Operating assets – operating liab. • RNOA=NOPAT/NOA • Find NNEP as residual = ROE-RNOA • Liquidity—CR, QR • Solvency—L/OE or L/TE, Times Interest Earned

  4. M5: Operating Income • Revenues—earned & realizable (8 cases p. 5-8) • Research & Development • Restructuring—severance pay, asset write downs • Income taxes—differences in timing • Extraordinary items—unusual & infrequent

  5. M6: Operating Assets • Accounts Receivable –after allowance • % of Sales/Aging • Direct writeoff for tax • Inventories—four methods in USA • FIFO, LIFO, WTD AVE, SPEC ID • Lower of cost or market • Fixed assets—depreciation, SL, DDB

  6. M7: Investments • Passive (<20%)—market value if known • Trading—gains/losses to income statement • Available for sale—“Other Cons. Income”, Equity • Operating (>20% & <50%)—Equity Method • Add share of income less share of dividends • Majority (>50%)—Consolidate—add together as if one company • Goodwill—payment for future earnings and control • Purchase price minus FMV of Assets • Written down if FMV < BV • Discontinued Operations—reported separately

More Related