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Chapter 03 - CHAPTER 3 Financial Statements Cash Flow and...

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    3-1 CHAPTER 3 Financial Statements, Cash  Flow, and Taxes Key Financial Statements   Balance sheet    Income statements   Statement of retained earnings   Statement of cash flows Accounting income vs. cash flow Federal tax system
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    3-2 The annual report Balance sheet – provides a snapshot of a  firm’s financial position at one point in time. Income statement – summarizes a firm’s  revenues and expenses over a given period of  time. Statement of retained earnings – shows how  much of the firm’s earnings were retained,  rather than paid out as dividends. Statement of cash flows – reports the impact  of a firm’s activities on cash flows over a given  period of time.
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    3-3 Balance sheet: Assets    Cash A/R Inventories Total CA Gross FA Less: Dep. Net FA Total Assets       2005 7,282   632,160 1,287,360 1,926,802 1,202,950     263,160     939,790 2,866,592     2004 57,600 351,200     715,200 1,124,000 491,000     146,200     344,800 1,468,800
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    3-4 Balance sheet:  Liabilities and Equity Accts payable Notes payable Accruals Total CL Long-term debt Common stock Retained earnings Total Equity Total L & E       2005 524,160   636,808     489,600 1,650,568 723,432 460,000       32,592     492,592 2,866,592     2004 145,600 200,000     136,000 481,600 323,432 460,000     203,768     663,768 1,468,800
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    3-5 Income statement Sales COGS Other expenses EBITDA Depr. & Amort. EBIT Interest Exp. EBT Taxes Net income     2005 6,034,000   5,528,000     519,988 (13,988)     116,960 (130,948)     136,012 (266,960)   (106,784)  (160,176)    2004 3,432,000 2,864,000     358,672 209,328       18,900 190,428       43,828 146,600       58,640   87,960
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    3-6 Other data No. of shares EPS DPS Stock price Lease pmts 2005 100,000 -$1.602 $0.11 $2.25 $40,000 2004 100,000 $0.88 $0.22 $8.50 $40,000
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    3-7 Statement of Retained  Earnings (2005) Balance of retained earnings, 12/31/04 Add: Net income, 2005 Less: Dividends paid Balance of retained  earnings, 12/31/05 $203,768 (160,176)    (11,000) $32,592
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    3-8 Statement of Cash Flows  (2005) OPERATING ACTIVITIES Net income Add (Sources of cash): Depreciation Increase in A/P Increase in accruals Subtract (Uses of cash): Increase in A/R Increase in inventories Net cash provided by ops. (160,176) 116,960 378,560 353,600 (280,960) (572,160) (164,176)
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    3-9 Statement of Cash Flows  (2005) L-T INVESTING ACTIVITIES Investment in fixed assets FINANCING ACTIVITIES Increase in notes payable Increase in long-term debt Payment of cash dividend Net cash from financing
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