Chap3notes - UNIVERSITY OF SANTO TOMAS COLLEGE OF COMMERCE...

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UNIVERSITY OF SANTO TOMAS COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION A.Y. 2008 2009 BASIC FINANCE FINANCIAL STATEMENTS AND CASH FLOWS CS ANDRES Financial Statements provides information of how a firm is doing financially. It also reflects the financial consequences of a company’s decisions and actions. Basic Financial Statements 1. Income Statement 2. Balance Sheet 3. Cash Flow Statement INCOME STATEMENT - also known as Profit or Loss Statement - indicates the amount of profits generated by a firm over a given time period. (that is why, the income statement is dated FOR THE YEAR ENDED) Sales (Revenue) xx Less: Cost of Goods Sold xx Gross Profit xx Less: Operating Expenses Marketing & Selling Expenses xx General & Admin. Expenses xx xx Operating Income / EBIT xx Less: Interest Expense (Financing cost) xx Net Income before tax xx Less: Income Taxes xx Net Income after tax xx *A positive net income does not necessarily mean that a firm has generated positive cash flows Earnings per share - how much income the firm made on a per share basis - Net income divided by the number of common stock shares outstanding Dividends per share - the amount of dividends a firm pays for each share outstanding - total dividends paid divided by number of common stock shares outstanding
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Chap3notes - UNIVERSITY OF SANTO TOMAS COLLEGE OF COMMERCE...

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