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Unformatted text preview: 1 Power Point Presentation designed by Dr. Sylvia C. Hudgins for Finance 323 at ODU 2 Evaluating Financial Performance Why? Why? Evaluate the success of an Evaluate the success of an ongoing business ongoing business Determine weaknesses of an Determine weaknesses of an ongoing business ongoing business Compare current performance Compare current performance with past performance with past performance Compare current performance Compare current performance with industry standards. with industry standards. 3 Basic Financial Statements:Review Balance Sheet Balance Sheet Assets = Liabilities + Owners Equity Assets = Liabilities + Owners Equity Current Liabilities A/P Accruals S-T Debt L-T Liabilities Bonds L-T Bank Debt Mortgages Common Stock Par Value Paid-In Capital Retained Earnings Current Assets Cash Inventory A/R Fixed Assets Land Plant Equipment Less:Depreciation 4 Basic Financial Statements:Review Balance Sheet Simsboro Computer Company Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Bonds $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Paid-in Capital 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530 Assets Liabilities The balance sheet for the Simsboro Computer The balance sheet for the Simsboro Computer Company is as follows: Company is as follows: 5 Basic Financial Statements:Review Income Statement Income Statement Revenues - Expenses = Net Income Revenues - Expenses = Net Income Sales Investment Income Gains Interest Received Dividend Received COGS Salaries Depreciation Taxes Other Expenses Interest Paid Dividends Dividends Retained Retained Earnings Earnings 6 Basic Financial Statements: Review The income statement for the Simsboro Computer The income statement for the Simsboro Computer Company is as follows: Company is as follows: Income Statement Simsboro Computer Company Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Net Operating Income $330 Interest Expense 60 Net Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Dividends Paid 100 Addition to Retained Earnings $62 7 Basic Teminology: Balance Sheet Simsboro Computer Company Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Bonds $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Paid-in Capital 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530 Assets Liabilities Income Statement Simsboro Computer Company Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Net Operating Income $330 Interest Expense 60 Net Income Before Taxes...
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ch3&ch4 - 1 Power Point Presentation designed by...

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