财务管理基础13版BRD.ppt

ReviewofAccounting 2 2 2 ChapterOutline IncomeStatementPrice earningsRatioBalanceSheetStatementofCashFlowsTax freeInvestments Deprecation 2 3 BasicFinancialStatements IncomeStatementBalanceSheetStatementofCashFlows 2 4 IncomeStatement DevicetomeasuretheprofitabilityofafirmoveraperiodoftimeItcoversadefinedperiodoftimeItispresentedinastair steporprogressivefashiontoexamineprofitorlossaftereachtypeofexpenseitemisdeducted 2 5 IncomeStatement cont d Sales CostofGoodsSold COGS GrossProfit GP GP Expenses EarningsBeforeInterestandTaxes EBIT orOperatingIncome OI EBIT Interest EarningsBeforeTaxes EBT EBT Taxes EarningsAfterTaxes EAT orNetIncome NI 2 6 IncomeStatement cont d 2 7 ReturntoCapital Threeprimarysourcesofcapital BondholdersPreferredstockholdersCommonstockholdersEarningspershareInterpretedintermsofnumberofoutstandingsharesMaybepaidoutindividendsorretainedbycompanyforsubsequentreinvestmentStatementofretainedearningsIndicatesdispositionofearnings 2 8 StatementofRetainedEarnings 2 9 Price Earnings P E Ratio MultiplierappliedtoearningspersharetodeterminecurrentvalueofcommonstockSomefactorsthatinfluenceP E EarningsandsalesgrowthofthefirmRisk volatilityinperformance Debt equitystructureofthefirmDividendpaymentpolicyQualityofmanagement 2 10 Price Earnings P E Ratio cont d Allowscomparisonoftherelativemarketvalueofmanycompaniesbasedon 1ofearningspershareIndicatesexpectationsaboutthefutureofacompanyPrice earningsratioscanbeconfusing 2 11 Price earningsRatiosforSelectedUSCompanies 2 12 LimitationsoftheIncomeStatement Incomegained lostduringagivenperiodisafunctionofverifiabletransactionsStockholders hence mayperceiveonlyamuchsmallergain lossfromactualday to dayoperationsFlexibilityinreportingtransactionsmightresultindifferingmeasurementsofincomegainedfromsimilareventsattheendofatimeperiod 2 13 BalanceSheet IndicateswhatthefirmownsandhowtheseassetsarefinancedintheformofliabilitiesorownershipinterestDelineatesthefirm sholdingsandobligationsItemsarestatedonanoriginalcostbasisratherthanatcurrentmarketvalue 2 14 BalanceSheetItems Liquidity AssetaccountsarelistedinorderofliquidityCurrentassetsItemsthatcanbeconvertedtocashwithin12monthsMarketablesecuritiesTemporaryinvestmentsofexcesscashAccountsreceivableAllowanceforbaddebtstodeterminetheiranticipatedcollectionvalueInventoryIncludesrawmaterials goodsinprogress orfinishedgoods 2 15 BalanceSheetItems cont d PrepaidexpensesRepresentfutureexpenseitemsthatarealreadypaidforInvestmentsLong termcommitmentoffundsIncludesstocks bonds orinvestmentsinothercompaniesPlantandequipmentCarriedatoriginalcostminusaccumulateddepreciationAccumulateddepreciationSumofpastandpresentdepreciationchargesoncurrentlyownedassets 2 16 BalanceSheetItems cont d Depreciationexpenseisthecurrentyear schargeTotalassets Financedthroughliabilitiesorstockholders equityShort termobligationsAccountspayableNotespayableAccruedexpense 2 17 Stockholder sEquity RepresentstotalcontributionandownershipinterestofpreferredandcommonstockholdersPreferredstockCommonstockCapitalpaidinexcessofparRetainedearnings 2 18 StatementofFinancialPosition BalanceSheet 2 19 ConceptofNetWorth Networth bookvalue Stockholders equity preferredstockcomponentMarketvalueisofprimaryconcerntothe FinancialmanagerSecurityanalystStockholders 2 20 LimitationsoftheBalanceSheet Mostofthevaluesarebasedonhistorical originalcostpriceTroublesomewhenitcomestoplantandequipmentinventoryFASBrulingondisclosureofinflationadjustmentsnolongerinforceItispurelyavoluntaryactonthepartofthecompany 2 21 LimitationsoftheBalanceSheet cont d Differencesbetweenpersharevaluesmaybedueto AssetvaluationIndustryoutlookGrowthprospectsQualityofmanagementRisk returnexpectations 2 22 ComparisonofMarketValuetoBookValueperShare 2 23 StatementofCashFlows EmphasizescriticalnatureofcashflowtotheoperationsofthefirmItrepresentscash cashequivalentsitemseasilyconvertibletocashwithin90daysCashflowanalysishelpsincombatingdiscrepanciesfacedthroughaccrualmethodofaccounting 2 24 StatementofCashFlows cont d AdvantageofaccrualmethodAllowsmatchingofrevenuesandexpensesintheperiodinwhichtheyoccurtoappropriatelymeasureprofitsDisadvantageofaccrualmethodAdequateattentionnotdirectedtoactualcashflowpositionoffirm 2 25 ConceptsBehindtheStatementofCashFlows 2 26 DeterminingCashFlowsfromOperatingActivities TranslationofincomefromoperationsfromanaccrualtoacashbasisDirectmethodEveryitemontheincomestatementisadjustedfromaccrualtocashaccountingIndirectmethodNetincomerepresentsthestartingpointRequiredadjustmentsaremadetoconvertnetincometocashflowsfromoperations 2 27 IndirectMethod 2 28 ComparativeBalanceSheets 2 29 CashFlowsfromOperatingActivities 2 30 DeterminingCashFlowsfromInvestingActivities Investingactivities Long terminvestmentactivitiesinmainlyplantandequipmentIncreasinginvestmentsrepresentauseoffundsDecreasinginvestmentsrepresentasourceoffunds 2 31 DeterminingCashFlowsfromFinancingActivities Financialactivitiesapplytothesale retirementof BondsCommonstockPreferredstockOthercorporatesecuritiesPaymentofcashdividendsSaleoffirm ssecuritiesisasourceoffundsPaymentofdividendsandrepurchaseofsecuritiesisauseoffunds 2 32 OverallStatementCombiningtheThreeSections 2 33 AnalysisoftheOverallStatement Howareincreasesinlong termassetsbeingfinanced Preferably adequatelong termfinancingandprofitsshouldexistShort termfundsmaybeusedtocarrylong termneeds couldbeapotentialhigh risksituationExample tradecreditandbankloans 2 34 DepreciationandFundsFlow DepreciationAttempttoallocatetheinitialcostofanassetoveritsusefullifeChargingofdepreciationdoesnotdirectlyinfluencethemovementoffunds 2 35 ComparisonofAccountingandCashFlows 2 36 FreeCashFlow FreeCashFlow Cashflowfromoperatingactivities Capitalexpenditures DividendsCapitalexpendituresMaintainproductivecapacityoffirmDividendsMaintainnecessarypayoutoncommonstockandtocoveranypreferr