商业财务学英文版教学课件：Chap002 Financial Statements and Cash Flow

FinancialStatementsandCashFlowChapter2Copyright©2011byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/IrwinUnderstandtheinformationprovidedbyfinancialstatementsKeyConceptsandSkills2.1TheBalanceSheet2.2TheIncomeStatementChapterOutline2.1TheBalanceSheetAnaccountant’ssnapshotofthefirm’saccountingvalueataspecificpointintimeTheBalanceSheetIdentityis:Assets≡Liabilities+Stockholders’EquityAssetsexactlyequalliabilities+equityAssetsarelistedinorderofliquidityTheamountoftimeitwouldtaketoconvertthemtocashinanoperatingbusinessObviouslycashandA/Raremoreliquidthanpropertyplantandequipment.LiabilitiesarelistedintheorderinwhichtheycomedueTakeNotice!

(onthefollowingBalanceSheet)U.S.CompositeCorporationBalanceSheet2008200720082007Currentassets:CurrentLiabilities:Cashandequivalents$140$107Accountspayable$213$197Accountsreceivable294270Notespayable5053Inventories269280Accruedexpenses223205Other5850Totalcurrentliabilities$486$455Totalcurrentassets$761$707Long-termliabilities:Fixedassets:Deferredtaxes$117$104Property,plant,andequipment$1,423$1,274Long-termdebt471458Lessaccumulateddepreciation(550)(460)Totallong-termliabilities$588$562Netproperty,plant,andequipment873814Intangibleassetsandother245221Stockholder'sequity:Totalfixedassets$1,118$1,035Preferredstock$39$39Commonstock($1pervalue)5532Capitalsurplus347327Accumulatedretainedearnings390347Lesstreasurystock(26)(20)Totalequity$805$725Totalassets$1,879$1,742Totalliabilitiesandstockholder'sequity$1,879$1,742Whenanalyzingabalancesheet,theFinanceManagershouldbeawareofthreeconcerns:AccountingliquidityDebtversusequityValueversuscostBalanceSheetAnalysisReferstotheeaseandquicknesswithwhichassetscanbeconvertedtocash—withoutasignificantlossinvalueCurrentassetsarethemostliquid.Somefixedassetsareintangible.Themoreliquidafirm’sassets,thelesslikelythefirmistoexperienceproblemsmeetingshort-termobligations.Liquidassetsfrequentlyhavelowerratesofreturnthanfixedassets.AccountingLiquidityCreditorsgenerallyreceivethefirstclaimonthefirm’scashflow.Shareholders’equityistheresidualdifferencebetweenassetsandliabilities.Debtandequityhavedifferentcosts;therelationshipbetweenthemhasimpactonthefirm’sprofitabilityDebtversusEquityUnderGenerallyAcceptedAccountingPrinciples(GAAP),financialstatementsoffirmsintheU.S.carryassetsathistoricalcost.Marketvalueisthepriceatwhichtheassets,liabilities,andequitycouldactuallybeboughtorsold,whichisacompletelydifferentconceptfromhistoricalcost.ValueversusCostMeasuresfinancialperformanceoveraspecificperiodoftimeTheaccountingdefinitionofincomeis: Revenue–Expenses≡Income2.2TheIncomeStatementU.S.C.C.IncomeStatementTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxesCurrent:$71Deferred:$13NetincomeAdditiontoretainedearnings$43Dividends:$43Theoperationssectionoftheincomestatementreportsthefirm’srevenuesandexpensesfromprincipaloperations.$2,2621,65532790$19029$21949$17084$86U.S.C.C.IncomeStatementTotaloperatingrevenues$2,262Costofgoodssold1,655Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$190Otherincome29Earningsbeforeinterestandtaxes$219Interestexpense49Pretaxincome$170Taxes84Current:$71Deferred:$13Netincome$86Additiontoretainedearnings:$43Dividends:$43Thenon-operatingsectionoftheincomestatementincludesallfinancingcosts,suchasinterestexpense.U.S.C.C.IncomeStatementTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxesCurrent:$71Deferred:$13NetincomeRetainedearnings:$43Dividends:$43Netincomeisthe“bottomline.”$2,2621,65532790$19029$21949$17084$86Therearethreethingstokeepinmindwhenanalyzinganincomestatement:GenerallyAcceptedAccountingPrinciples(GAAP)NoncashItemsTimeandCostsIncomeStatementAnalysisThematchingprincipalofGAAPdictatesthatrevenuesbematchedwithexpenses.Thus,incomeandexpensesarereportedwhenearnedorincurred,eventhoughnocashflowmayhaveoccurred.GAAPDepreciationisthemostapparentnon-cashitem.Nofirmeverwritesacheckfor“depreciation”Othernoncashaccountsincludeuncollectedsalesonaccount,unpaidpurchasesonaccountanddeferredtaxes,noneofwhichrepresentacashflowThus,netincomedoesnotequalcashflowNoncashItemsThinkofthefutureashavingtwoparts:shortrunandlongrunInthe