公司金融学英语课件：Ch3 Accounting and Finance

1、Chapter 3Accounting and Finance1Outline 3.1 The Balance Sheet (资产负债表) 3.2 The Income Statement (损益表) 3.3 The Statement of Cash Flows (现金流量表) 3.5 Taxes2Definition of Financial Statements A financial statement (or financial report) is a formal record of the financial activities and position of a busin

2、ess. Relevant financial information is presented in a structured manner and in a form easy to understand.中国会计准则GAAPIFRS33.1 The Balance Sheet4The Balance Sheet Financial statement that shows the value of the firms assets and liabilities at a particular time. The Balance Sheet Identity:5Assets Liabil

3、ities Stockholders Equity6The Main Balance Sheet ItemsCurrent Assets Cash & Securities Receivables Inventories+Fixed Assets Tangible Assets Intangible AssetsCurrent Liabilities Payables Short-term Debt+Long-term Liabilities+Shareholders Equity=Left: the uses of fund raisedRight: the sources of f

4、und raised78Home Depots Balance Sheet (December 31, 2012) $Millions9Net current assets Net current assets (or net working capital) roughly measures the companys potential reservoir of cash. Net working capital = current assets current liabilitiesHome Depots current assets total $15,372 million; its

5、current liabilities amount to $11,462 million. Therefore, its net current assets is $15,372 $11,462 = $3,910 million.10The Balance Sheet Common-Size Balance SheetAll items in the balance sheet are expressed as a percentage of total assets1112Home Depot Common Size Balance Sheet (December 31, 2012)Th

6、e Balance Sheet Market Value vs. Book ValueBook Values: Value of assets or liabilities according to the balance sheet (based on historical or original values)Market Values: The value of assets or liabilities when they are resold in a market (current values of assets and liabilities). Market values o

7、f assets and liabilities do not generally equal their book values.13The Balance Sheet Market Value of Equity (Market Capitalization)= Market Price per Share x Number of Shares OutstandingCannot be negativeEquity “market values” are usually higher than their “book values”14Market Value vs. Book Value

8、ExampleAccording to B/S, Firm A has equity worth $6 billion, debt worth $4 billion, assets worth $10 billion. The market values of firm As 100 million shares are priced at $75 per share and the debt is at $4 billion.Q: What is the market value of your assets?A: Since (Assets = liabilities + equity),

9、 your assets must have a market value of $11.5 billion15Market Value vs. Book ValueExample (continued)Market Value Balance Sheet Assets = $11.5 bil Debt = $4 bil Equity = $7.5 bilBook Value Balance Sheet Assets = $10 bil Debt = $4 bil Equity = $6 bil163.2 The Income Statement17The Income Statement F

10、inancial statement that shows the revenues, expenses, and net income of a firm over a period of time.1819Home Depot Income Statement & Common-Size Income Statement (December 31, 2012)The Income Statement Earnings Before Income & Taxes (EBIT)EBIT = total revenues costs deprecation = 74,754 -

11、(48,912 + 16,305) 1,684 = $ 7,853 million20Profits (Income) versus Cash Flow “Profits” subtract depreciation (a non-cash expense). “Profits” ignore cash expenditures on new capital (the expense is capitalized). “Profits” record income and expenses at the time of sales, not when the cash exchanges ac

12、tually occur.213.3The Statement of Cash Flows22The Statement of Cash Flows Financial statement that shows the firms cash receipts and cash payments over a period of time.23The Statement of Cash Flows 1. The income statement does not recognize capital expenditures as expenses in the year that the cap

13、ital goods are paid for. Instead, it spreads those expenses over time in the form of an annual deduction for depreciation. 2. The income statement uses the accrual method of accounting, which means that revenues and expenses are recognized when sales are made, rather than when the cash is received o

14、r paid out.2425Home Depot Statement of Cash Flows (December 31, 2012)The Statement of Cash Flows Example26A: + The Statement of Cash Flows Free Cash FlowsCash available for distribution to investors after firm pays for new investments or additions to working capitalFCF = Net Income + interest + depr

15、eciation additions to net working capital capital expenditures273.5 Taxes28TaxesExampleFirms A and B both have earnings before interest and taxes (EBIT) of $100 million. A pays out part of its profits as debt interest. Firm B does not.Taxes and cash flows can be changed by the use of debt.29TaxesExa

16、mple (cont.)If you were both the debt and equity holders of thefirm, which would generate more cash flow to you?(assume net income = cash flow)30TaxesExample (cont.)Firm AFirm BEBIT100100Interest 40 0Pretax income 60100Taxes (35%) 21 35Net income 39 6531Corporate Tax Rates (2014)32Personal Tax Rates

17、 (2014)33Taxes Taxes have a major impact on financial decisions Marginal Tax Rate is the tax that the individual pays on each extra dollar of income. Average Tax Rate is the total tax bill divided by total income.34Taxes Example If you are single and your total income is $50,000, Tax = (.10 $9,075) + (.15 $27,825) + (.25 $13,100) = $8,356.25 Average tax rate =