BFIN620_PPT_CH3_sp09-2

BFIN620_PPT_CH3_sp09-2 - 3- 1Accounting and...

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Unformatted text preview: 3- 1Accounting and FinanceAccounting and FinanceChapter 3Brealey-Myers-Marcus5thEditionBusiness Finance 6203- 2Topics CoveredInterpreting the main financial statementsBalance SheetIncome StatementStatement of Cash FlowsComparing book values and market valuesComparing income and cash flowTaxation of corporate income3- 3The Balance SheetCurrent AssetsCurrent AssetsCash Marketable securitiesReceivablesInventoriesPLUSFixed AssetsFixed AssetsTangible assetsIntangible assetsCurrent LiabilitiesCurrent LiabilitiesPayablesShort-term debtPLUSLong-Term LiabilitiesLong-Term LiabilitiesLong-term debtPLUSShareholder EquityShareholder Equity=3- 4Market Values and Book ValuesBook valueAcquisition cost less accumulated depreciationMarket valueCurrent market price (opportunity cost)Often more difficult to determine than book valueSole basis for prudent financial decisionsAs one moves down the left column of the balance sheet:assets become less liquidthere is a greater difference between book value and market value3- 5Calculating Market ValuesAccording to GAAP, Tuttle Products has:Equity worth $6 billionDebt worth $4 billionAssets worth $10 billion...
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BFIN620_PPT_CH3_sp09-2 - 3- 1Accounting and...

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