Net increase in cash cash december 312009 cash

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Net increase in cash . Cash, December 31,2009 0 Cash, December 31, 2010 . • Includes $(74) relating to foreign currency exchange rate changes. Cash amounts per balance sheet Net cash inflow from financing inancial Statement Linkages The four financial statements are linked within and across periods-consider the following: The income statement and the balance sheet are linked via retained earnings. For Berkshire Hathaway, the $12,967 million increase in retained earnings (reported on the balance sheet) equals its net income (reported on the income statement) (see Exhibit 1.5). Berkshire Hatha- way did not pay dividends in 2010.
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1-15 Module 1 I Framework for Analysis and Valuation Retained earnings, contributed capital, and other equity balances appear both on the state- ment of stockholders' equity and the balance sheet. The statement of cash flows is linked to the income statement as net income is a component of operating cash flow. The statement of cash flows is also linked to the balance sheet as the change in the balance sheet cash account reflects the net cash inflows and outflows for the period. Items that impact one financial statement ripple through the others. Linkages among the four financial statements are an important feature of the accounting system. Information Beyond Financial Statements Important financial information about a company is communicated to various decision makers through means other than the four financial statements. These include the following: Management Discussion and Analysis (MD&A) Independent Auditor Report Financial statement footnotes Regulatory filings, including proxy statements and other SEC filings We describe and explain the usefulness of these additional information sources throughout the book. L03 Describe business analysis within the context of a competitive environment. Analyzing the Competitive Environment To understand a company we must "know the business." A way to formalize that knowledge is through use of Porter's value-chain model (see Porter, Competitive Advantage: Creating and Sustaining Superior Performance, 1985, and the graphic below). Analysis using the value-chain seeks to identify and understand the activities that create a company's profit margin. Primary activities are: Inbound logistics . t F' . f t t Legal, accounting, Operations UJ urn In ras ruc ure financial managemenf '" Outbound logistics ~ Human resource management Personnel, recruitment, _ trammg, staff planninq Marketing and ~ sales R Technology/product development :~;f~;;r~~:, ~~~::tSt~::~~~,t~~duction 0. S .. ~ ~--------------------------------------------------- ervIcmg t Procurement suopuer management, fu~d;ng, subcontracting, specification Support activities are: INBOUND, 1,·OPERATIOf.lSOUTBOUND MARKETING F · . fast ct e .~LOGISTICS LOGISTICS & SALES Ifm m r ru ur '" " .~ Examples: Examples:' Examples: Examples;, Examples: Human resource ~ '~~::~n~ntrol;~a:~~:I~~~ng;~~~~~~:~~~~~~; ~~~t~;~ent; :!r~~:!~ce; e .rawmaterials~production II· dispatch; crder'taklnq; education: management co centrof lcontrcr; qualfty,delivery; promotibn;~ Jrw"ning .
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