Lecture 2

Lecture 2 - FIN 311 Instructor Syed Walid Reza Lecture 2...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 311 Instructor: Syed Walid Reza Lecture 2 Spring 2016
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Today: Chapter 2 Financial Statements, Taxes, and Cash Flow The Balance Sheet The Income Statement Taxes Cash Flow 2
Image of page 2
Balance sheet What is balance sheet? What’s the balance sheet identity? a. Total assets = Total liabilities + Shareholders’ equity? b. Total assets = Total liabilities – Shareholders’ equity? c. Total assets – Total liabilities = Shareholders’ equity? d. Current assets + Long-term assets = Short-term liabilities + Long-term debt + Shareholders’ equity? 3
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Balance sheet 4
Image of page 4
Net working capital NWC = Current assets – Current liabilities What’s the explanation? What kind of NWC signals good financial health of a firm? 5
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Balance sheet – Liquidity Ability to convert to cash quickly without a significant loss in value Liquid firms are less likely to experience financial distress So, hold as much cash as possible? Trade-off to find balance between liquid and illiquid assets 6
Image of page 6
Balance sheet – debt vs. equity
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern