09_22_09 Ch3 Financial Statements, Cash Flow,

09_22_09 Ch3 Financial Statements, Cash Flow, - Chapter 3...

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Chapter 3 Outline: Financial Statements, Cash Flow, and Taxes A manager primary goal is to maximize the value of his or her firm’s stock o Value is based on future cash flows Annual Report – a report issued annually by a corporation to its stockholders. It contains basic financial statements as well as managements analysis of the firm’s past operations and future prospects o Verbal section which describes operating results and new developments o Four basic financial statements Balance Sheet – shows what assets the company owns and who has claims on those assets as of a given date Income Statement – shows the firm’s sales and costs (and thus profits) during some past period Statement of Cash Flows – shows how much cash the firm began the year with, how much it ended up with, and what it did to increase or decrease cash Statement of Stockholders’ Equity – shows the amount of equity the stockholders had at the start of the year, the items that increased or decreased equity, and the equity at the end of the year o Information contained in the annual report can be used to help forecast future earnings and dividends Balance Sheet – A statement of a firm’s financial position at a specific point in
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09_22_09 Ch3 Financial Statements, Cash Flow, - Chapter 3...

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