公司理财(罗斯)第2章(英文.ppt

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1、2-0,CHAPTER,2,Accounting Statementsand Cash Flow,2-1,Chapter Outline,2.1 The Balance Sheet2.2 The Income Statement2.3 Net Working Capital2.4 Financial Cash Flow2.5 The Statement of Cash Flows2.6 Financial Statement Analysis2.7 Summary and Conclusions,2-2,Sources of Information,Annual reportsWall Str

2、eet JournalInternetNYSE()Nasdaq()Text()SECEDGAR10K&10Q reports,2-3,2.1 The Balance Sheet,An accountants snapshot of the firms accounting value as of a particular date.The Balance Sheet Identity is:Assets Liabilities+Stockholders EquityWhen analyzing a balance sheet,the financial manager should be aw

3、are of three concerns:accounting liquidity,debt versus equity,and value versus cost.,2-4,The Balance Sheet of the U.S.Composite Corporation,Liabilities(Debt),Assets,20X2,20X1,and Stockholders Equity,20X2,20X1,Current assets:,Current Liabilities:,Cash and equivalents,$140,$107,Accounts payable,$213,$

4、197,Accounts receivable,294,270,Notes payable,50,53,Inventories,269,280,Accrued expenses,223,205,Other,58,50,Total current liabilities,$486,$455,Total current assets,$761,$707,Long-term liabilities:,Fixed assets:,Deferred taxes,$117,$104,Property,plant,and equipment,$1,423,$1,274,Long-term debt,471,

5、458,Less accumulated depreciation,-550,-460,Total long-term liabilities,$588,$562,Net property,plant,and equipment,873,814,Intangible assets and other,245,221,Stockholders equity:,Total fixed assets,$1,118,$1,035,Preferred stock,$39,$39,Common stock($1 per value),55,32,Capital surplus,347,327,Accumu

6、lated retained earnings,390,347,Less treasury stock,-26,-20,Total equity,$805,$725,Total assets,$1,879,$1,742,Total liabilities and stockholders equity,$1,879,$1,742,The assets are listed in order by the length of time it normally would take a firm with ongoing operations to convert them into cash.C

7、learly,cash is much more liquid than property,plant and equipment.,2-5,Accounting Liquidity,Refers to the ease and quickness with which assets can be converted to cash.Current assets are the most liquid.The more liquid a firms assets,the less likely the firm is to experience problems meetingshort-te

8、rm obligations.Liquid assets frequently have lower rates of return than fixed assets.,2-6,Debt versus Equity,Generally,when a firm borrows it gives the bondholders first claim on the firms cash flow.Thus shareholders equity is the residual difference between assets and liabilities.,2-7,Value versus

9、Cost,The accounting value of a firms assets is frequently referred to as the carrying value or the book value of the assets.Under GAAP audited financial statements of firms in the U.S.carry assets at cost.Market value is a completely different concept.It is the price at which willing buyers and sell

10、ers trade the assets.Managements job is to create a value for the firm that is higher than its cost.,2-8,Problem 1,The Agua Fria Bottling Company in 2001 had notes payable of$1,500,accounts payable of$1,400,and long-term debt of$6,000.The corresponding entries for 2002 are$1,750,$1,000,and$6,000.For

11、 assets,Agua Fria had in 2001$1,000 in cash and marketable securities and$2,000 of inventory.The corresponding entries for 2002 are$1,200 and$1,750.Accounts receivable at the end of 2001 were$800 and$950 at the end of 2002.The firms net plant and equipment was$9,800 in 2001 and$11,100 in 2002.Constr

12、uct Agua Frias balance sheet for 2001 and 2002.,2-9,2-10,2.2 The Income Statement,The income statement measures performance over a specific period of time.The accounting definition of income isRevenue Expenses Income,2-11,U.S.C.C.Income Statement,(in$millions),20X2,Income Statement,U.S.COMPOSITE COR

13、PORATION,Total operating revenues,Cost of goods sold,Selling,general,and administrative expenses,Depreciation,Operating income,Other income,Earnings before interest and taxes,Interest expense,Pretax income,Taxes,Current:$71,Deferred:$13,Net income,Retained earnings:$43,Dividends:$43,The operations s

14、ection of the incomestatement reports the firms revenues and expenses from principal operations,$2,262,-1,655,-327,-90,$190,29,$219,-49,$170,-84,$86,2-12,(in$millions),20X2,Income Statement,U.S.COMPOSITE CORPORATION,Total operating revenues,$2,262,Cost of goods sold,-1,655,Selling,general,and admini

15、strative expenses,-327,Depreciation,-90,Operating income,$190,Other income,29,Earnings before interest and taxes,$219,Interest expense,-49,Pretax income,$170,Taxes,-84,Current:$71,Deferred:$13,Net income,$86,Retained earnings:$43,Dividends:$43,The non-operating section of the income statement includ

16、es all financing costs,such as interest expense.,U.S.C.C.Income Statement,2-13,(in$millions),20X2,Income Statement,U.S.COMPOSITE CORPORATION,Total operating revenues,Cost of goods sold,Selling,general,and administrative expenses,Depreciation,Operating income,Other income,Earnings before interest and

17、 taxes,Interest expense,Pretax income,Taxes,Current:$71,Deferred:$13,Net income,Retained earnings:$43,Dividends:$43,Usually a separate section reports as a separate item the amount of taxes levied on income.,$2,262,-1,655,-327,-90,$190,29,$219,-49,$170,-84,$86,U.S.C.C.Income Statement,2-14,(in$milli

18、ons),20 x2,Income Statement,U.S.COMPOSITE CORPORATION,Total operating revenues,Cost of goods sold,Selling,general,and administrative expenses,Depreciation,Operating income,Other income,Earnings before interest and taxes,Interest expense,Pretax income,Taxes,Current:$71,Deferred:$13,Net income,Retaine

19、d earnings:$43,Dividends:$43,Net income is the“bottom line”.,$2,262,-1,655,-327,-90,$190,29,$219,-49,$170,-84,$86,U.S.C.C.Income Statement,2-15,Problem 2,Agua Fria Bottling Company had sales of$6,750 during 2002,costs of goods sold were$2,700,depreciation was$1,200,and had$600 of interest expense.Th

20、e tax rate is 40%and all taxes are paid currently.Construct Agua Frias income statement for the year.,2-16,Solution of problem 2,Agua Fria Bottling Company Income Statement2002Net sales$6,750Cost of goods sold(2,700)Depreciation(1,200)Earnings before interest and taxes 2,850Interest paid(600)Taxable

21、 income 2,250Taxes(900)Net Income$1,350,2-17,2-18,Income Statement Analysis,There are three things to keep in mind when analyzing an income statement:GAAPNon Cash ItemsTime and Costs,2-19,Generally Accepted Accounting Principles,GAAPThe matching principle of GAAP dictates that revenues be matched wi

22、th expenses.Thus,income is reported when it is earned,even though no cash flow may have occurred,2-20,Income Statement Analysis,Non Cash ItemsDepreciation is the most apparent.No firm ever writes a check for“depreciation”.Another noncash item is deferred taxes,which does not represent a cash flow.De

23、ferred taxes result from differences between accounting income and true taxable income.The accounting tax can be broken down as current taxes and deferred taxes.The current tax portion is sent to the tax authority,the deferred tax portion is not.,2-21,Income Statement Analysis,Time and CostsIn the s

24、hort run,certain equipment,resources,and commitments of the firm are fixed,but the firm can vary such inputs as labor and raw materials.In the long run,all inputs of production(and hence costs)are variable.Financial accountants do not distinguish between variable costs and fixed costs.Instead,accoun

25、ting costs usually fit into a classification that distinguishes product costs from period costs.,2-22,2.3 Net Working Capital,Net Working Capital Current Assets Current LiabilitiesNWC is usually growing with the firm.,2-23,The Balance Sheet of the U.S.C.C.,Liabilities(Debt),Assets,20X2,20X1,and Stoc

26、kholders Equity,20X2,20X1,Current assets:,Current Liabilities:,Cash and equivalents,$140,$107,Accounts payable,$213,$197,Accounts receivable,294,270,Notes payable,50,53,Inventories,269,280,Accrued expenses,223,205,Other,58,50,Total current liabilities,$486,$455,Total current assets,$761,$707,Long-te

27、rm liabilities:,Fixed assets:,Deferred taxes,$117,$104,Property,plant,and equipment,$1,423,$1,274,Long-term debt,471,458,Less accumulated depreciation,-550,-460,Total long-term liabilities,$588,$562,Net property,plant,and equipment,873,814,Intangible assets and other,245,221,Stockholders equity:,Tot

28、al fixed assets,$1,118,$1,035,Preferred stock,$39,$39,Common stock($1 par value),55,32,Capital surplus,347,327,Accumulated retained earnings,390,347,Less treasury stock,-26,-20,Total equity,$805,$725,Total assets,$1,879,$1,742,Total liabilities and stockholders equity,$1,879,$1,742,Here we see NWC g

29、row to$275 million in 20X2 from$252 million in 20X1.,This increase of$23 million is an investment of the firm.,2-24,Multiple choice,1.Assets are listed on the balance sheet in order of A)decreasing liquidity.B)decreasing size.C)increasing size.D)relative life.E)None of the above.,2-25,2.Of the follo

30、wing assets,which is the generally the least liquid?A)Marketable securities B)Cash C)Fixed assets D)Accounts receivable E)All are equally liquid.,2-26,3.Accounting liquidity is defined as A)the amount of cash the firm has.B)the turnover ratio.C)the ability of the assets to generate income.D)the ease

31、 and quickness with which assets can be converted to cash.E)None of the above,2-27,4.The carrying value or book value of assets A)is determined under GAAP and is based on the cost of the asset.B)represents the true market value according to GAAP.C)is always the best measure of the companys value to

32、an investor.D)is always higher than the replacement cost of the assets.E)None of the above.,2-28,5.Which of the following is a noncash expense?A)Depreciation B)Deferred taxes C)Payroll expenses D)Both A and B E)All of the above.,2-29,6.In 2004,TimeNow Corporation had fixed assets of$1,345,current as

33、sets of$260,current liabilities of$180 and shareholders equity of$775.What was the net working capital for TimeNow in 2004?A)$80$260-$180=$80 B)$180 C)$260 D)$390 E)None of the above.,2-30,7.In 2004,TimeNow Corporation had current assets of$260 and current liabilities of$180.In 2003,current assets w

34、ere$220 and current liabilities were$160.What was the change in net working capital for TimeNow in 2004?A)$20 B)$60 C)$80 D)$160 E)None of the above.,2-31,Answer:ARationale:Net working capital in 2004=$260-$180=$80Net working capital in 2003=$220-$160=$60Change in NWC=$80-$60=$20,2-32,2.4 Financial

35、Cash Flow,In finance,the most important item that can be extracted from financial statements is the actual cash flow of the firm.Since there is no magic in finance,it must be the case that the cash from received from the firms assets must equal the cash flows to the firms creditors and stockholders.

36、CF(A)CF(B)+CF(S),2-33,Financial Cash Flow of the U.S.C.C.,Cash Flow of the Firm,Operating cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(173),(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,(23),Total,$4

37、2,Cash Flow of Investors in the Firm,Debt,$36,(Interest plus retirement of debt,minus long-term debt financing),Equity,6,(Dividends plus repurchase of,equity minus new equity financing),Total,$42,Operating Cash Flow:EBIT$219Depreciation$90Current Taxes($71)OCF$238,0R:OCF=Net income+Depreciation+Inte

38、rest expense+Deferred taxes,2-34,Financial Cash Flow of the U.S.C.C.,(in$millions),20X2,Financial Cash Flow,U.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operating cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus

39、 sales of fixed assets),Additions to net working capital,Total,Cash Flow of Investors in the Firm,Debt,(Interest plus retirement of debt,minus long-term debt financing),Equity,(Dividends plus repurchase of,equity minus new equity financing),Total,Capital SpendingPurchase of fixed assets$198Sales of

40、fixed assets(25)Capital Spending$173,(173),(23),$42,$36,6,$42,=(1423-1274)+(245-221)=$149+$24=increase in property,plant and equipment+increase in intangible assets,2-35,Financial Cash Flow of the U.S.C.C.,(in$millions),20X2,Financial Cash Flow,U.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operati

41、ng cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,Total,Cash Flow to Investors in the Firm,Debt,(Interest plus retirement of debt,minus long-term debt finan

42、cing),Equity,(Dividends plus repurchase of,equity minus new equity financing),Total,NWC grew from$275 million in 20X2 from$252 millionin 20X1.This increase of$23 million is the addition to NWC.,(173),(23),$42,$36,6,$42,2-36,Financial Cash Flow of the U.S.C.C.,(in$millions),20X2,Financial Cash Flow,U

43、.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operating cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,Total,Cash Flow of Investors in the Firm,Debt,(Inter

44、est plus retirement of debt,minus long-term debt financing),Equity,(Dividends plus repurchase of,equity minus new equity financing),Total,(173),(23),$42,$36,6,$42,2-37,Financial Cash Flow of the U.S.C.C.,(in$millions),20X2,Financial Cash Flow,U.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operating

45、 cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,Total,Cash Flow of Investors in the Firm,Debt,(Interest plus retirement of debt,minus long-term debt financi

46、ng),Equity,(Dividends plus repurchase of,equity minus new equity financing),Total,Cash Flow to CreditorsInterest$49Retirementof debt 73Debt service 122Proceeds from new debt sales(86)Total36,(173),(23),$42,$36,6,$42,=49-13=interest expense-increase of long-term debt,2-38,Financial Cash Flow of the U

47、.S.C.C.,(in$millions),20X2,Financial Cash Flow,U.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operating cash flow,$238,(Earnings before interest and taxes,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,Tota

48、l,Cash Flow of Investors in the Firm,Debt,(Interest plus retirement of debt,minus long-term debt financing),Equity,(Dividends plus repurchase of,equity minus new equity financing),Total,Cash Flow to StockholdersDividends$43Repurchase of stock 6Cash to Stockholders 49Proceeds from newstock issue(43)T

49、otal$6,(173),(23),$42,$36,6,$42,Increase of preferred stock,common stock,capital surplus=(39+55+347)-(39+32+327),2-39,Financial Cash Flow of the U.S.C.C.,(in$millions),20X2,Financial Cash Flow,U.S.COMPOSITE CORPORATION,Cash Flow of the Firm,Operating cash flow,$238,(Earnings before interest and taxe

50、s,plus depreciation minus taxes),Capital spending,(Acquisitions of fixed assets,minus sales of fixed assets),Additions to net working capital,Total,Cash Flow of Investors in the Firm,Debt,(Interest plus retirement of debt,minus long-term debt financing),Equity,(Dividends plus repurchase of,equity mi