Outline For Business Final

Outline For Business Final - Outline For Business Final -...

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Outline For Business Final - Chapter 12- Statement of Cash Flows o Operating Activities Actions or operations that affect net income Examples: production and purchase of merchandise, sale of goods and services to customers, and expenditures to administer the business o Results of different activities Decrease in current asset = increase Increase in current asset = (decrease) Decrease in current liability = (decrease) Increase in current liability = increase Net cash flows from operating activities = increase o Investing Activities Transactions and events that affect long-term assets Examples: purchase and sale of long-term assets, purshase and sale of short- term investments other than cash equivalents and trading securities, lending and collecting money for notes receivable. o Results of different activities Buy long term investments and intangible assets = (decrease) Sell long term investments and intangible assets = increase Net cash flows from investing activities = increase o Financing Activities Transactions and events that affect long-term liabilities and equity Examples: obtaining cash from issuing debt and repaying the amounts borrowed, receiving cash from or distributing cash to owners o Results of different activities
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Issue stock = increase Buy treasury stock = (decrease) Pay cash dividends = (decrease) Issue bonds (long term debt) = increase Pay on bond (or other long term debt) = decrease o Desired outcome for each activity Operating Activities Want to see positive cash flows from day to day activities Investing Activities Negative cash flows are a good thing they signal that the company is making improvements or growing Financing Activities No clear cut answer o Exceptions which do not fall into categories Stock dividends Conversion of bonds to common stock Convert preferred to common stock Buy an asset with stock Buy an asset with debt - Chapt er 13 Financial Stat e m e nt Analysis o Incom e Stat e m e nt Evaluation of wheth er or not a com p any provides m ore sales and s ervices than what it cost the m to do so for that p eriod No cash is involved in an incom e st at e m e nt Other n a m e s: Profit a nd loss st at e m ent
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Statement of operations  Earnings statement o Statement of stockholders equity What changes occurred to shareholders equity during the period Stockholders equity consists of: Common stock Preferred stock Treasury stock Retained earnings o Statement of cash flows What were the sources of cash inflows and outflows for the  o Standard for Financial Services analysis Rule of thumb measures Ideal measures according to analysis Analysis of past performance Looking for trends Comparison with industry norms May need to compare segments o Types of Analysis Horizontal Analysis:
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Outline For Business Final - Outline For Business Final -...

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