Chapter_2_Fall2011_s

Chapter_2_Fall2011_s - 1 Chapter 2 Accounting Statements...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth Chapter 2 Accounting Statements and Cash Flow 2 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth Key Concepts and Skills Know the difference between book value and market value Know the difference between accounting income and cash flow Know how to determine a firms cash flow from its financial statements 3 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth The Balance Sheet Current Assets Fixed Assets 1 Tangible 2 Intangible Total Value of Assets: Shareholders Equity Current Liabilities Long-Term Debt Total Firm Value to Investors: What should we buy??? How should we pay for it? 4 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth Hadlock Trends, Inc. Balance Sheet See TABLE 2.1 in p.27 5 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth Balance Sheet The balance sheet is a snapshot of the firms assets and liabilities at a given point in time Assets are listed in order of decreasing liquidity Ease of conversion to cash Without significant loss of value Liabilities are listed at face value in order to reflect the time (short/long term) of required payment. Balance Sheet Identity Assets = Liabilities + Stockholders Equity Hadlock Trends (2009): 3,588 = (540+457)+2,591 6 Chapter 2 Accounting Statements and Cash Flow FI 311 Elizabeth Booth The Balance Sheet Is stated value reflective of market value? Stated value does not reflect the current value of the asset. In fact the financial manager is responsible for increasing the market value of the assets. Many valuable assets (mgt team, brand value) do not appear on financial statements. Common equity is a residual account, meaning it is the Plug number Assets liabilities preferred stock = common equity: 3,588-997 = 2,591 or Common equity = Common Stock + Paid in Capital + Retained earnings What happens if assets decrease in value (i.e. we write off obsolete What happens if assets decrease in value (i....
View Full Document

Page1 / 22

Chapter_2_Fall2011_s - 1 Chapter 2 Accounting Statements...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online