Chapter 03- Financial Statements

Chapter 03- Financial Statements - 3-1CHAPTER 3Financial...

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Unformatted text preview: 3-1CHAPTER 3Financial Statements3-2How financial statements are used.List the types of information found in a corporation’s annual report.Explain what a balance sheet is, the information it provides, and how assets and claims on assets are arranged on a balance sheet.Explain what an income statement is and the information it provides.Differentiate between net cash flow and accounting profit.Identify the purpose of the statement of cash flows, list the factors affecting a firm’s cash position that are reflected in this statement, and identify the three categories of activities that are separated out in this statement.Specify the changes reported in a firm’s statement of retained earnings.Discuss what questions can be answered by looking through the financial statements, and explain why investors need to be cautious when they review financial statements.Learning Objectives3-3CHAPTER 3 - Financial StatementsOutlineGoal of Financial ManagementKey Financial StatementsBalance sheet Income statementStatement of retained earningsStatement of cash flowsUses and Limitations of Financial Statements3-4Goal of Financial ManagementThe goal of financial management is to take actions that will maximize the value of a firm’s stock.The Manager’s primary goal is to maximize the value of his or her firm’s stock.Value is based on the firm’s future cash flowsProfitis King, But CashRules 3-5The annual reportThe annual report contains the company’s financial statements and a letter from the Chairman addressed to the shareholders.Corporations issue annual reports. Information contained in an annual reports is used to forecast earnings and evaluate companies....
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This note was uploaded on 12/16/2009 for the course FIN 300 taught by Professor Olander during the Spring '08 term at ASU.

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Chapter 03- Financial Statements - 3-1CHAPTER 3Financial...

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