2_Financial_Statements.pdf - Financial Management Financial Statements 1 33 Chapter overview 1 Review the main financial statements and how they help in

2_Financial_Statements.pdf - Financial Management Financial...

This preview shows page 1 - 10 out of 33 pages.

Financial Management Financial Statements 1 / 33
Image of page 1
Chapter overview 1. Review the main financial statements and how they help in the analysis of investment decisions. 2. The difference between book value of equity and market value: why do these two numbers differ? Which is more relevant for financial decisions? 3. Review of some interesting financial ratios: debt-equity ratio, enterprise value, EPS, gross and net margins, ROE, etc... 4. The distinction between cash flow and earnings. 5. The trend toward more “relevant” financial statements. 2 / 33
Image of page 2
Disclosure of Financial Information Financial Statements I Accounting reports prepared by the company which contain information about past operations and performance. I Must be filed with the relevant authority: I USA: SEC (10Q, quarterly, 10K, annual), Federal Reserve (banks) I Spain: Registro Mercantil (annual accounts), Banco de Espa˜na (banks) 3 / 33
Image of page 3
Disclosure of Financial Information Preparing the Financial Statements I Generally Accepted Accounting Principles: I USA: US GAAP I Spain and EU: IFRS I Auditors I Third (independent) parties who certify that the financial statements reflect faithfully the financial position of the company 4 / 33
Image of page 4
Disclosure of Financial Information Financial Statements I Balance-sheet / statement of financial position I Income statement or statement of comprehensive income I Cash-flow statement I Statement of changes in stockholder’s equity I Notes to the financial statements 5 / 33
Image of page 5
The Balance-Sheet Shows the financial position of the company at a certain moment of time . I The key identity: ASSETS = LIABILITIES + EQUITY I or EQUITY = ASSETS LIABILITIES 6 / 33
Image of page 6
The Balance-Sheet Three main items I Assets: Resources that the company “controls” (as a consequence of past activity) I Liabilities: Obligations that the company has to satisfy I Equity: The difference between the two above Alternatively: I Assets: investments made by the company I L+E: the sources of financing of such investments 7 / 33
Image of page 7
The Balance-Sheet Assets: I Current assets: either cash or assets that could be converted into cash within one year. I Cash and other liquid assets I Short-term financial investments I Accounts receivable / Clients I Stock / Inventories I Other current assets 8 / 33
Image of page 8
The Balance-Sheet Assets: I Non current assets I Tangible assets I Property, plants and equipment I Subject to depreciation I Intangible fixed assets I Intellectual property I Goodwill I Amortization I Investment Property (IP) I Long-term financial investments (HTM, AFS. . . ) I Deferred tax assets 9 / 33
Image of page 9
Image of page 10

You've reached the end of your free preview.

Want to read all 33 pages?

  • Winter '16
  • Victoria Vanasco

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

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors