corp fin CHAPTER 3 Outline and Notes

corp fin CHAPTER 3 Outline and Notes - 301 CHAPTER 3...

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301 CHAPTER 3 Outline and Notes 3.1 Cash Flow and Financial Statements: A Closer Look Sources and Uses of Cash The Statement of Cash Flows 3.2 Standardized Financial Statements Common-Size Statements Common-Base Year Financial Statements: Trend Analysis Combined Common-Size and Base-Year Analysis 3.3 Ratio Analysis Short-Term Solvency, or Liquidity, Measures Long-Term Solvency Measures Asset Management, or Turnover, Measures Profitability Measures Market Value Measures 3.4 The DuPont Identity A Closer Look at ROE An Expanded DuPont Analysis 3.5 Using Financial Statement Information Why Evaluate Financial Statements? Choosing a Benchmark Problems with Financial Statement Analysis
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3.1. Cash Flow and Financial Statements: A Closer Look .A Sources and Uses of Cash Activities that bring cash in are sources . Firms raise cash by selling assets, borrowing money or selling securities. Activities that involve cash outflows are uses . Firms use cash to buy assets, pay off debt, repurchase stock or pay dividends. Mechanical Rules for determining Sources and Uses: Sources: Decrease in asset account Increase in liabilities or equity account Uses: Increase in asset account Decrease in liabilities or equity account A general Statement of Cash Flows Operating Activities + Net Income + Depreciation + Decrease in current asset accounts (except cash) + Increase in current liability accounts (except notes payable) - Increase in current asset accounts (except cash) - Decrease in current liability accounts (except notes payable) Investment Activities + Ending net fixed assets - Beginning net fixed assets + Depreciation
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Financing Activities ± Change in notes payable ± Change in long-term debt ± Change in common stock - Dividends Putting it all together: ± Net cash flow from operating activities ± Fixed asset acquisition ± Net cash flow from financing activities
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This note was uploaded on 01/20/2012 for the course FIN 310 taught by Professor Staff during the Fall '11 term at The University of Akron.

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corp fin CHAPTER 3 Outline and Notes - 301 CHAPTER 3...

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