Day 4-Ch 3 and POW 1-9.12.11

Day 4-Ch 3 and POW 1-9.12.11 - Day4 Chapter3:RatioAnalysis...

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Business Management 201 Day 4 Chapter 3: Ratio Analysis POW #1: Bill and Skip September 12, 2011
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Day 4 Agenda 1) TA POW Review Sessions Begin Tuesday & Thursday- Location TBD 2) Permanent  Location for TA Open Review Sessions  TBD 3) Book Assignments Made This Week 4) Reading Quiz Chapter 4-Due Wed 8:00 AM 5) Bring Calculators to Class 6) Jeopardy Wednesday—Sit Close to Front 7) Review Cash Flow Statement-Brent’s Books Exercise 8) Chapter 3 Discussion 9) POW #1: Bill and Skip
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Thoughts for the Day REPETITION  of the same thought or  physical action develops into a habit,  which, repeated frequently enough,  becomes an automatic reflex.” ~Norman Vincent Peale, Protestant Clergyman REPETITION  does not transform a lie  into a truth.” ~Franklin D. Roosevelt, 32 nd  US President  “Constant  REPETITION  carries  conviction.” ~Robert Collier, Motivational Author
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Statement of  Statement of  Cash Flows Cash Flows
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Statement of Cash Flows CASH IS KING!!! Breaks Cash Flows into THREE Sources 1) Operating: Arises naturally from  business “operations” 2) Investing:  PP&E, Land, LT  Assets 3) Financing:   BSD (i.e.  B orrowing,  S tock,  D ividends)
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Cash Flow Analysis Source  = Cash  INCREASES  (i.e. MORE cash so  you ADD the change in value for CF Statement.) Balance Sheet Items Liabilities:  Assets: Equity: Use = Cash  DECREASES  (i.e. LESS cash so you  SUBTRACT the change in value for CF Statement.) Balance Sheet Items Liabilities:  Assets: Equity:
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Statement of Cash Flows:  Statement of Cash Flows:  Make-a-Friend Exercise for  Make-a-Friend Exercise for  Brent’s Books Brent’s Books
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Statement of Cash Flows Cash flow from Operating Cash flow from Investing Cash flow from Financing Change in Cash   + + =
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Make-a-Friend Exercise The 2010 Net Income for Brent’s Books  was  $14,525 .  We need to analyze the  information from the Balance sheet on the  following slides to construct the Cash Flow  statement for Brent’s Books.
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Assets:   Liabilities & Owners' Equity: 2010          2009 2010             2009     Cash 19,000         15,000 Accts Pay 25,000             22,000     Accts. Rec. 34,000         28,000 Notes Pay  30,000             26,000    Inventories 27,000         24,000 Other CL 16,000             20,000     Total CA 80,000         67,000 Total CL 71,000             68,000         PP&E 368,000         350,000 LT Debt   80,000              65,000    Less A. Depr. 155,000         150,000 Total Liab 151,000            133,000       Net PP &E          213,000        200,000 Equity   52,000             50,000     Total Assets 293,000         267,000 Ret Earn.   90,000             84,000      Total Equity           142,000            134,000
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