Chapter 3 - Financial Statements & Ratio
Chapter 3 - Financial Statements & Ratio FIN 315
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This 4 page Class Notes was uploaded by Chris Holder on Thursday January 21, 2016. The Class Notes belongs to FIN 315 at a university taught by Dr. Milanese in Spring 2016. Since its upload, it has received 111 views.
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Better than the professor's notes. I could actually understand what the heck was going on. Will be back for help in this class.
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Date Created: 01/21/16
Thursday, January 21, 2016 Chapter 3 – Financial Statements & Ratio Analysis 1. Financial Statements a. Balance Sheet i. Assets, ii. Liabilities, iii. Owner’s Equity b. Income Statement i. Sale/ Revenue ii. Gross Profit iii. Net Income c. Cash flows i. Types of Cash flows d. Statement of Retained Earnings i. Brief Definition 2. Quiz 1 Review Material Balance Sheet: ASSETS = LIABILITIES + OWNER’S EQUITY *Current Assets & Liabilities: are short-term assets and liabilities, which means they are expected to converted into cash (current assets) or paid (current liabilities) within 1 year or less Assets 1. Current Assets a. Cash & Marketable Securities b. Accounts Receivable c. Inventory i. Total CA 2. Fixed Assets: Long Term Assets Gross Fixed Assets – Depreciation & Amortization = Net Fixed Assets Goodwill: an intangible asset Liabilities 1. Current Liabilities a. Acc. Payable b. Accrual c. Notes Payable i. Total CL 2. Long-Term Debt a. Total Liabilities Thursday, January 21, 2016 Goodwill during acquisition of a company, Goodwill is the positive difference of what ever paid above the assets for the company $10 mil ( $Amount paid in acquisition ) $8 mil ( $Asset Value of Company being acquired) $2 mil Goodwill CL- CA = Working Capital Equity Retained Earnings Dividends: Common Stock, Preferred Stock Income Statement All income, the money that you make minus, all of your expenses 1. Sales/ Revenue 2. – Cost of Goods Sold (COGS) 3. = Gross Profit Gross Profits 4. Operation Expenses -Operating Expense 5. – Operating Income 6. – Interest Expense - Depreciation & Amortization 7. = EBT ( Taxable Income ) Operating Profits 8. – Taxes 9. Net Income after taxes 10.– Dividends Net Income 11.Earnings Available - Preferred Dividends Example Earnings Available for On Next Page Common Stockholders -Common Dividend Net Income (Or Income Available to Common) / Shares Outstanding = Earnings per Share(EPS) $10,000,000=$2.00 EPS $ 5,000,000 Thursday, January 21, 2016 Cash Flows *A summary of cash flows over a period of time 3 Types 1. Operating: money gained and used through operations 2. Investing: putting money into projects with the hope that I t will help make more money in the future 3. Finance: getting money from the bank to finance operations Statement of Retained Earnings A running total of the net income, profits, earned, and nay cash dividends paid throughout the history of the company. Retained Earnings is a counter account that sums the cash amounts earned, used, distributed, or invested within the business, such as, $500 cash was used to buy equipment, retained earning increases by $500. Remember Assets = Liabilities + Owner’s Equity. The equation needs to balance out, so $500 on one side means $500 on the other. Thursday, January 21, 2016 Quiz 1 Review Material Chapter 1 Entire Chapter Pgs. 2-28 Chapter 2 Entire Chapter Pgs. 28-52 Chapter 4 Pgs. 110-119 Understand: Depreciation Pg 110 Cash flows Pg 112-115 *Important Note, Chapter 3 will not be on Quiz 1
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