财务报表分析12

Grandfinale Shareholders Equity 1 Understandthedifferentpriorityclaimsofcommonandpreferredshareholdersandthedisclosureofthoseclaimsintheshareholders sectionofthebalancesheet 2 Understandtheunderlyingconceptsandapplytheaccountingproceduresfortheissuanceofcapitalstock 3 Understandwhytheformatforreportingincomemattersandthatdifferentkindsofincomerequiredifferentformats Shareholders Equity 4 Understandthedistinctionbetweenearningsandcomprehensiveincome 5 Understandtheunderlyingconceptsandapplytheaccountingproceduresforcash property andstockdividends 6 Understandtheunderlyingconceptsandapplytheaccountingproceduresfortheacquisitionandreissueoftreasurystock 7 Developtheskillstointerpretdisclosuresaboutchangesinshareholders equityaccount CapitalContributions 1 CapitalContributions Corporationsissuecommonorpreferredstocktoobtainfundstofinanceoperatingandinvestingactivities 2 OperatingTransactions Firmsuseassetsprovidedbycreditorsandownerstogenerateearnings 3 Distributions Firmsdistributeassetstoshareholderseitherasadividendorasrepurchaseofcommonorpreferredstock ReviewofImportantConcepts 1 Shareholders equityisaresidualinterest representingtheshareholders claimsontheassetsofafirminexcessoftheclaimsofcreditors 2 Allfirmsissuecommonstock Firmsmayalsoissuepreferredstockwhichhasaseniorbutlimitedclaimonassets 3 Commonandpreferredstockusuallyhaveaparorastatedvalue 4 Firmsaccumulateinformationaboutrevenuesandexpensestosupporttheincomestatement Revenuesandexpensesareclosedtoretainedearningsattheendoftheaccountingperiod 5 Firmsmaydistributeassetstoshareholdersasadividendwhichreducesretainedearningsandassets 6 Retainedearningsistheaccumulationofearningsreducedbydividends CapitalContributions TheCorporateform 1 Limitstheliabilityofowner 2 Allowsforraisingfundsbyissuingshares 3 Makestransferofownershipeasyinsecondarymarkets Financingacorporation a Preferredstock b Commonstock PreferredShareholders Equity Preferredshareholdersgenerallyhaveaclaimonassetsthatissuperiororseniortoanyclaimbycommonshareholders Theirclaimsareoftenlimitedsothatpreferredshareholderslookmorelikecreditorsthanowners Somepreferredisconvertibleintocommonshares Firmsdonothavetoissuepreferredstockandmanyfirmshavenot CommonShareholders Equity Allcorporationshavecommonstock theyneednothavepreferredstock Commonshareholdersaretheresidualinterestowners thatis theyowneverythingthatisleftafterallotherobligationshavebeenfulfilled Balancesheetdisclosureincludes 1 Capitalcontributions2 Earningsanddividends3 Accumulatedothercomprehensiveincome4 Treasurysharetransactions IssuingCapitalStock a IssueforCash b Issuefornon cashAssets c IssueunderOptionArrangements d EmployeeStockOptionPlans e StockRights f StockWarrants g ConvertibleBondsorPreferredStock CapitalContributions IssueforCash Afirmneedingfinancingmayissuenewsharesofstock Inreturnfortheshares thefirmgetscash Thisisnotdisadvantageoustopreviousownersofsharesbecauseeventhoughownershipgoesup thetotalassetsgoupalso forhistoricalandlegalreasons theincreaseinequityisseparatedintoanincreaseincommonstockatparandtheremainder anincreaseinadditionalpaid incapital Cash100 000Commonstock 10par 10 000AdditionalP I C 90 000 CapitalContributions IssueforNon CashAssets Afirmmayfinditdesirabletotradestockforanassetotherthancash Inthiscase thequestioniswhatisthevalueofthetransactions Welookfirsttoareliablemarketbasedvalueoftheassetandrecordthatstockandtheassetatthisprice Ifthevalueoftheassetishardtomeasure wemaytakethemarketvalueofthestockinstead CapitalContributions IssueUnderOptionsArrangements Firmssometimesgivestockatreducedpricesorfreeinexchangeforgoodsorservicesorascompensation Topmanagementisoftencompensatedinstockorstockoptionssothattheywillhavestrongincentivestomakedecisionswhichwillincreasethepriceofshares EmployeeStockOptionPlans Astockoptionisacontractthatallowstheholdertobuyastatednumberofsharesofstockforafixedprice calledtheexerciseprice Ifthemarketpriceisabovetheexerciseprice thentheoptionhavevalue Otherwise theholderwilljustignoretheoptionandithasnovalue Onthegrantdate thefirmtransfersoptionstoanemployee forareducedpriceorfree Theemployeetypicallycannotsellthestockimmediatelybutmustwaituntilthevestingdate Whentheemployeedoesbuysharesofstockusingtheoption togetthelowerprice thisiscalledexercisingtheoption EmployeeStockOptionPlans cont Howdoyouvalueanoption Ifthepriceofthestockfall itisvalueless Ifthepricegoesup thentheamountofincreaseisthevalue Onecannotknowtheultimatevalueuntiltheexercisedate TwoGAAPmethods MarketValueMethod APBOpinion25Method Firmshaveargued underAPB25 thatiftheexercisepriceisabovethecurrentstockprice thentheoptionhasnovalueandrequiresnorecording StockRights Likestockoptions stockrightsgivetheholdertherighttoacquiresharesataspecifiedprice StockOptionsaregenerallygrantedtoemployeesandcannotbetransferuntilvested StockRightsaregenerallygrantedtocurrentshareholderswhocantradetheminsecondarypublicmarkets GAAPignoreanyvalueinherentinthestockrightonthedateofthegrantandmakenoentrywhengranted Ofcourse theexerciseofastockrightisrecordedlikethesaleofshares StockWarrants Firmsissuestockwarrantstotheinvestingpublicforcash Whensold thewarrantsarerecordedinamannersimilartoaliability Whenwarrantholdersexercisetheirrights thefirmrecordsthetransactionlikethesaleofstockexceptthatthewarrantaccountcreatedwhengrantedisreduced ConvertibleBondsorPreferredStock Aconvertiblesecuritymaybeexchangedattheholdersoptionforanothersecurity Forexample aconvertiblebondmaybeexchangeableforashareofcommonstock Thisfeatureallowstheholdertochoosetheoptionthathasthegreaterbenefitandisadesirablefeature Convertiblesecuritiesarerecordedasregularsecuritiesuntiltheyareconverted ReportingOperatingTransactions a Reportingoperatingtransactions b Comprehensiveincome c Adjustmentstoretainedearnings d Corporatedistributions Dividendsincash Dividendsinstock Stocksplits e Treasuryshares f Earningspershare ReportingOperatingTransactions cont ThetermEarningshasnoprecisedefinition Itisusedtorefertoprofitsinageneralsensebutnotatechnicalsense Itisoftenusedasabroaderviewofprofitwhichmightincludechangesineconomicwealthnotcapturedbynetincome NetIncomeisameasureofearningsusingaccrualaccountingmethodsasdefinedbyGAAP Earningsandnetincomeareaggregatesoftheoperatingactivitiesofthefirm Weassumethatinvestorsdesireearningsinformationsothattheycanforecastfuturecashflowsasinputtotheirinvestmentdecision ReportingOperatingTransactions cont a Reportingoperatingtransactions1 Recurring nonrecurringandcentral peripheral2 Measurementofearningseffect3 Classificationintheincomestatement4 Unrealizedgainsandlossesfromchangesinmarketvalues 5 Aninternationalperspectiveb Comprehensiveincome Recurring NonrecurringandCentral Peripheral Recurring nonrecurringreferswhetherearningscanbeexpectedtorepeatinthefuture Central peripheralreferstohowcloselyearningsarerelatedtothecoreactivitiesofthefirm Thefirmmaybemoreefficientincoreactivitiesthaninperipheralactivities Sometimesthetermcorecompetenciesisused NatureofIncomeItems CreationandsaleofFirm sregularproducts Incomefromsalesofproductorlinesofbusinessthatthefirmintendstodiscontinue Periodicsalesofequipmentpreviouslyusedinmanufacturing Lossesfromearthquakesorhurricanes RecurringNonrecurring Peripheraltoprimaryoperatingactivity Primaryoperatingactivity MeasurementofEarningsEffect Revenuesandexpensesresultfromrecurringprimaryactivitiesofthefirm Gainsandlossesresultfromeitherperipheralornonrecurringactivities Revenueandgainsresultinincreasesinshareholders equity Expensesandlossesresultindecreasesinshareholders equity Revenuesandexpensesaregrossconceptsinthatnothingissubtracted Gainsandlossesarenetconceptsinthatacostbasisissubtractedfromaninflowindefiningthegainorloss Classification Earningsfromcontinuingoperationsarerevenues gains expensesandlossesfromactivitiesofthefirmthatcanbeexpectedtocontinueinthenearfuture Earnings gainsandlossesfromdiscontinuedoperationsareseparatereportsofactivitiesthatwillbediscontinuedinthenearfuture Extraordinarygainsandlossesaregainsandlossesfromeventswhichareboth1 Unusualinnature and2 Infrequentinoccurrence AdjustmentsforchangesinAccountingPrinciplesaredisclosuresoftheeffectsofachangeintheuseofaccountingrules UnrealizedGainsandLossesfromChangesinMarketValues TheFASBhasincreasinglyrequiredfirmstoreportcertainassetsandliabilitiesattheircurrentmarketvalues 1 Inventoriesatlowerofcostormarket2 Plantassetsandintangiblesatcurrentmarketvaluewhenassetimpairmenthasoccurred3 Financialinstrumentsincludingderivativesatmarketvalue4 Marketableequitysecuritiesatmarketvalue UnrealizedGainsandLossesfromChangesinMarketValues Cont Whenanasset orliability accountischangedtomarketvalue doubleentryaccountingsystemsrequireanoffset Theoffsetisgenerallytoanunrealizedgainorloss Unrealizedmeansthatthegainorlosswasnottheresultofaneconomictransaction butratheramarketadjustment Marketablesecurities Unrealizedgain orloss Whatisthenatureoftheunrealizedgainorlossaccount UnrealizedGainsandLossesfromChangesinMarketValues Cont Theunrealizedgainorlossaccountispartofearningsbecauseitchangesthewealthofthefirm Itmayormaynotbepartofnetincomedependingoftheaccountingrules Unrealizedgainsorlossesmaybeclosedattheendoftheaccountingperiodandappearontheincomestatement tradingsecurities Ortheymaybypasstheincomestatementandappearonthebalancesheet securitiesavailableforsale CorporateDistributions Adividendisthedistributionofassetstotheowners Theamountofanydividendmaybelimitedbystatueorbycontract Threeformsofdividends a Cashdividends b Stockdividends c Stocksplits Stockmayberepurchasedastreasurystock CorporateDistributions cont 1 Legallimitsondividends statutorysomestateslimitthepaymentofdividends theyarenotallowedifretainedearningsweretobeforcedtobelowzero 2 Legallimitsondividends contractualcontractswithdebtorsorothersmayfurtherrestrictthepaymentofdividends 3 Dividendsandcorporatefinancialpolicy4 Accountingfordividendsa cashdividendsc stockdividendsb propertydividendsd stocksplits Dividendsincash a Cashdividends dividendspaidincashWhendividendsaredeclared theygiverisetoaliabilityandareductioninretainedearnings Retainedearnings150 000Dividendspayable150 000 Dividendspayable150 000Cash150 000 Whenthecashissentout theliabilityisfulfilled Dividendsinnon cash b Propertydividends dividendspaidinassetsotherthancash Theaccountingissimilartocashdividendsexceptwhenthedividendispaid thecreditistotheassetratherthantocash Dividendspayable150 000Asset150 000 DividendsinStock c StockdividendsTechnicallythisisadividendpaidinnewsharesofstockandnotgeneraldividends Howeverthetermisoftenusedtorefertoallkindsofdividendsincludingcashdividendsinthesenseof dividendsonstock ratherthan dividendspaidinstock Retainedearningsarereduced debited andcommonstockanda p i c areincreased credited Theeffectofthisistomoveequityfromretainedearningstocommonstockanda p i c DividendsinStock Accountingforstockdividends RetainedEarnings Commonstock AdditionalP I C StockSplits d Stocksplitsorsplit upsTheoreticallythisisjustalargestockdividend Ithaslongbeendebatedwhetherthereisanydifferencebetweenastockdividendandastocksplitotherthanthesize GAAPdoesconsiderthetwodifferentandrequiresadifferentaccountingtreatmentforstocksplits Specifically nojournalentryisrequiredforastocksplit Manybelievethatastocksplitwillresultinanincreaseinthemarketpriceoftheshares Empiricalevidenceseemstosupportthis butacausalrelationshiphasnotbeenestablished StockRepurchases Treasurysharesarecommonsharesthathavebeenrepurchasedbythefirm Treasurysharesarenotassetsorinvestments Instead theyareareversaloftheissuanceofcommonshares Recallthatwhenstockwasissued thefirmreceivedcashandissuedstock Cash100 000Commonstock 10par 10 000AdditionalP I C 90 000 TreasuryShares Cont Thepurchaseoftreasurysharesisthereverseoftheissuance thefirmgivesupcashandgetsbacktheshares Treasuryshares cost 110 000Cash110 000 Treasurysharesarerecordedatcostandkeptinaseparateaccountsothatthefirmcanmoreeasilyresellthem iftheydesire Treasurysharesareacontra negative accounttotheshareholders equitysection Treasurysharesdonotreceivecashdividendsorvote Theymaysplitorreceivedividendsinstock TreasuryShares Cont Iftreasurysharesarelaterresold thereisnogainorlossonthesale Ratheranydifferenceincreasesordecreasestheadditionalpaidincapitalaccount Cash14 000Treasuryshares cost 11 000Additionalp i c