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FINA 4920E Chapter 1 Lecture

by: Morgan Notetaker

FINA 4920E Chapter 1 Lecture FINA 4920E

Marketplace > University of Georgia > Finance > FINA 4920E > FINA 4920E Chapter 1 Lecture
Morgan Notetaker
GPA 3.6

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About this Document

These are notes over Pope's lecture 1, and it highlights any key points made from the Concepts in Action videos.
Financial Modeling
Chris Pope
Class Notes
finance, financialmodeling
25 ?




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This 2 page Class Notes was uploaded by Morgan Notetaker on Monday September 5, 2016. The Class Notes belongs to FINA 4920E at University of Georgia taught by Chris Pope in Fall 2016. Since its upload, it has received 6 views. For similar materials see Financial Modeling in Finance at University of Georgia.


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Date Created: 09/05/16
 Income statement: summary of performance over set time period  Dollars earned by shareholders over time  10q= quarterly, 10k= annually o Net income = revenues – expenses o Expenses= all costs incurred ro create revenues (labor, materials, selling cost, dep, int, tax o gross profit= sales – cogs o Market capitalization= number of shares multiplied by price per share  Balance Sheet: tracks sources and uses of capital for firm o One moment in time/ “snapshot” o Assets of left side- how firm uses capital o Liabilities and shareholder equity on right side- sources of capital (debt of equity) o Largely represents historical values  On asset side-- PPE is reported at its purchase cost  On liability/ equity side—debt reported at face value and equity at historical investment in the firm  Market value represents growth potential and current economic conditions  Market to Book Ratio: compares market capitalization of equity to balance sheet value of equity; signals future growth potential that investors see in firm  Price per share x number of shares outstanding= shareholder equity  Projecting debt needs o For balance sheet o Total assets = 10 mil, CL= 1 mil, LT debt unknown, equity = 7mil, Total Liabilities and equity is unknown  LT debt= total liabilities and equity minus equity minus CL  Total Liabilities= total assets  Statement of Cash Flows: tracks use of cash from firm’s income statement and balance sheet; how healthy firm is o Cash from operations, cash from investments, cash from financing o Sum of three gets change in cash and marketable securities on the balance sheet o Cash from operations= tracks net income plus any adjustments for non-cash items (depreciation, current assets, current liabilities) o Cash from investments= tracks spending on PPE o Cash from financing= tracks dividends, changes in debt, changes in equity  Interview: How Three Financial Statements Connect o Income Statement and Balance Sheet  Depreciation of PPE is expensed on income statement  Net income not paid out as dividends is added to retained earnings on balance sheet  Interest on notes payable and LT debt is ta write-off or expense on income statement  Sales made on credit added to AR  Materials paid for but not sold are added to inventory o Statement of Cash Flows tracks changes on both statements o Balance sheet changes always found by comparing beginning and end of the year Key Things to Remember From Concepts in Action: - Use price paid and not mortgage price when calculating depreciation - Use cell references whenever you can in case you need to change any data or run through “what if” scenarios -Operating Profit= Gross margin – Selling and Admin. Expenses


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