FFM CH3 - Financial Statements, Cash Flow, and Taxes Key...

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Unformatted text preview: Financial Statements, Cash Flow, and Taxes Key Financial Statements Balance Sheet Income Statement Statement of Stockholders Equity Statement of Cash Flows Free Cash Flow Federal Tax System Chapter 3 3-1 Annual Report - most important report that corporations issue to stockholders - info can be used to forecast future earnings and dividends Balance sheet provides what assets a company own and who has claims on them as of a certain date Income statement summarizes a firms revenues and expenses (and thus profits) over a given period of time. Statement of cash flows shows how much cash the firm began the year with, how much cash it ended up with, and what it did to increase/decrease cash Statement of stockholders equity shows amount of equity stockholders had at start of the year, items that increased/decreased equity, and equity at the end of the year 3-2 3-3 3-4 Balance Sheet Analysis CA/CL 3-5 Balance Sheet Analysis - LT Liabilities sources of funding in order of when they are payable to the providers ie, Payables, then debt by maturity and hybrids Market versus Book value: GAAP permits depreciation on fixed assets based on a schedule. It is not necessarily indicative of market value. In the example 2008 book value is $940M (common equity)/50M shares outstanding or $18.80. Market share price at the time was $23.06. 3-6 Income Statement Operating Income (EBIT) is derived from the operations of the firms core business. EBIT = Sales revenue Operating costs 3,000 2,716.2 = 283.8 Depreciation = percentage of fixed assets used up during the production year Amortization = same as above, but for intangible assets such as patents, copyrights and trademarks EBITDA= Earnings before interest, taxes, depreciation and amortization 3,000 2,616.2 383.8 3-8 3-9 Statement of Cash Flows Operating Activities Add sources of cash: Net income Add back noncash expenses: depreciation and amortization...
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This note was uploaded on 02/08/2011 for the course FINANCE 300 taught by Professor zhou during the Spring '08 term at Rutgers.

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FFM CH3 - Financial Statements, Cash Flow, and Taxes Key...

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