201Lec13 - 201Lec13.PPT Financial Analysis 1 Sustainable...

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201Lec13.PPT 1 Financial Analysis Financial Analysis
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is best use of past data to forecast profitability. is the ability to generate future profits. comes from  recurring  items such as:  - net income from operations - recurring non-operating items  (such  as investment income or interest expense)  Statements must separate out non-recurring  irregular  items. 2 Sustainable Income Sustainable Income Sustainable Income Sustainable Income
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are  separated  on the income statement.  are reported  net of tax expense (or refund). Example: $100,000 irregular item, 30% tax rate   » Report as $70,000 after tax Types of irregular items: - discontinued operations   - extraordinary items Irregular Items Irregular Items Irregular Items Irregular Items 3
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Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Components of the income statement 4
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Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Components of the income statement 5 Discontinued Operations Discontinued Operations Termination of one business (sale, dissolution, etc.) Separate year of disposal effects. Clutters up view of ongoing  operations.
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Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Irregular items on the Income Statement Components of the income statement 6 Extraordinary Items Extraordinary Items Must be UNUSUAL and INFREQUENT
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Required by GAAP Includes certain items that affect equity which aren’t on the income statement.
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This note was uploaded on 03/08/2012 for the course BUS ADM 201 taught by Professor Konkel during the Spring '08 term at Wisconsin Milwaukee.

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201Lec13 - 201Lec13.PPT Financial Analysis 1 Sustainable...

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