MGMT310_lecture2

MGMT310_lecture2 - Lecture 2 Lecture 2 Announcements: I...

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cture 2 Lecture 2 Announcements: I will post practice problems and practice solutions later today
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Financial statements Corporate reports provide important information: Balance Sheet snapshot of the firm A snapshot of the firm Income Statement Measures performance over time ash flows Cash flows Describes the health of the firm
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Balance sheet Current Net orking Current Assets Liabilities Working Capital (NWC) Long-Term Debt Fixed Assets Shareholders’ Equity Total Assets = Total Liabilities + Shareholders’ Equity
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Balance sheet considerations Liquidity Speed and ease of converting an asset to cash Debt vs. Equity Debt has precedence over equity to a firm’s cash flows Debt is referred to as financial leverage Market Value vs. Book Value Under GAAP, financial statements list assets at what they originally cost, not at their current market values. arket value is what is important for decision making Market value is what is important for decision making.
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Income statement Net sales –cost of goods sold –depreciation rning before interest and taxes (EBIT) = Earning before interest and taxes (EBIT) –interest paid =Taxab
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MGMT310_lecture2 - Lecture 2 Lecture 2 Announcements: I...

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