Exam2_FC - The flashcards are formatted for printing....

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$335,000 - $10 million Dividends
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Don’t come out for tax purposes, so they’re not on the income statement. Use a flat tax rate of 34%.
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> 18.33 million Capital Gain
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Selling assets for more than you paid. Use a flat tax rate of 35%
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1. Liquidity 2. Operating profitability 3. Financing decisions 4. Return on equity Financial Statement Analysis
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5. Market value
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Are our decisions maximizing shareholder wealth? Five categories used to analyze financial statements:
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Liquidity Ratios Financial Ratios
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Tools that help us determine the financial health of a company; we can compare them with its values from previous years and with those of its industry. Do we have enough liquid assets to meet approaching obligations?
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Operating Profitability Ratios Liquidity Ratios
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Do we have enough cash on hand to pay the bills that are coming up? Measure how efficiently the firm’s assets generate operating profits; want to generate sale from the assets we’ve invested in.
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Return on Equity Financing Decisions
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using debt capital to finance assets; firms use debt to lever (increase) returns on common equity. How well are we
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Exam2_FC - The flashcards are formatted for printing....

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