ch1 slides - 2-0 Chap 2: value Financial Statements, Taxes,...

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2-0 0 Chap 2 : Financial Statements, Taxes, and Cash Flow Know the difference between book value and market value Know marginal and average tax rate concepts Understand the major characteristics of the Balance Sheet and Income Statement Know the difference between accounting income and cash flow Know how to determine a firm’s cash flow from its financial statements
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2-1 1 Chapter 2 Outline PRESENTATION 2-A The Balance Sheet The Income Statement Taxes PRESENTATION 2-B Cash Flow
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2-2 2 The Balance Sheet The balance sheet is a snapshot of the firm’s assets and liabilities at a given point in time , e.g. Dec. 31, 2006 Assets are listed in order of liquidity Ease of conversion to cash Without significant loss of value Balance Sheet Identity Assets = Liabilities + Stockholders’ Equity
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2-3 3 Figure 2.1
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2-4 4 US Corporation Balance Sheet – Table 2.1
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2-5 5 Market vs. Book Value The balance sheet provides the book value of the assets, liabilities and equity.
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ch1 slides - 2-0 Chap 2: value Financial Statements, Taxes,...

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