BCOR 2200 Chapter 2

BCOR 2200 Chapter 2 - Chapter 2 Financial Statements, Taxes...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 2 Financial Statements, Taxes and Cash Flows 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Chapter Outline 2.1  The Balance Sheet 2.2  The Income Statement 2.3  Taxes 2.4  Cash Flow 2
Background image of page 2
Key Concepts and Skills Know the difference between book value  and market value Know the difference between accounting  income and cash flow Know the difference between average and  marginal tax rates Know how to determine a firm’s cash flow  from its financial statements 3
Background image of page 3

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

View Full DocumentRight Arrow Icon
2.1 Balance Sheet Assets are listed from Most Liquid  to Least Liquid “Net Fixed Assets” is Book Value (LOCOM) net of Accumulated  Depreciation Assets = Liabilities + OE   OE = Assets - Liabilities 4
Background image of page 4
5 Balance Sheet (Continued 1) The balance sheet is a “snap-shot” What does the company  own  today?   What does the company  owe  today? How much do the owners “own” (called the  residual ) The left side shows what is being employed  by the business to do what it does Inventory, Cash, Factories, Machines, Trucks… The right side shows how it paid for the  assets How much is borrowed and for how long How much is left for the owners Note:  Owner’s Equity is not how much the  owners contributed.  It is the current  residual  value .
Background image of page 5

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

View Full DocumentRight Arrow Icon
Balance Sheet (Continued 2) Debt is also called  Leverage Given the equity, what value of assets are employed? Put up $1m, borrow $1m, Employ $2m in assets Put up $1m, borrow $2m, Employ $3m in assets Market Value vs. Book Value:   1.Market Value of  Assets  vs. Book Value of  Assets GAAP: LOCOM Coors in Golden: Land on books at cost What is the market value of the land? 2.Market Value of  Equity  vs. Book Value of  Equity Book Value of Equity = Book Value of Assets – Liabilities Market Value of Equity = # of Shares x Price per Share What would account for the difference between book and  market? What kind of companies have a relatively high BM?  Low 
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/08/2009 for the course BCOR 2200 taught by Professor Tomnelson during the Spring '08 term at Colorado.

Page1 / 28

BCOR 2200 Chapter 2 - Chapter 2 Financial Statements, Taxes...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online