罗斯公司理财英文第九版Chap002.pptx

罗斯公司理财英文第九版Chap002.pptx

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FinancialStatementsandCashFlowChapter2Copyright2010bytheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-1KeyConceptsandSkillsoUnderstandtheinformationprovidedbyfinancialstatementsoDifferentiatebetweenbookandmarketvaluesoKnowthedifferencebetweenaverageandmarginaltaxratesoKnowthedifferencebetweenaccountingincomeandcashflowoCalculateafirmscashflow2-2ChapterOutline2.1TheBalanceSheet2.2TheIncomeStatement2.3Taxes2.4NetWorkingCapital2.5FinancialCashFlow2.6TheAccountingStatementofCashFlows2.7CashFlowManagement2-3SourcesofInformation2-42.1TheBalanceSheetqAnaccountantssnapshotofthefirmsaccountingvalueataspecificpointintimeqTheBalanceSheetIdentityis:

AssetsLiabilities+StockholdersEquity2-5U.S.CompositeCorporationBalanceSheet2010200920102009Currentassets:

CurrentLiabilities:

Cashandequivalents$140$107Accountspayable$213$197Accountsreceivable294270Notespayable5053Inventories269280Accruedexpenses223205Other5850Totalcurrentliabilities$486$455Totalcurrentassets$761$707Long-termliabilities:

Fixedassets:

Deferredtaxes$117$104Property,plant,andequipment$1,423$1,274Long-termdebt471458Lessaccumulateddepreciation（550）（460）Totallong-termliabilities$588$562Netproperty,plant,andequipment873814Intangibleassetsandother245221Stockholdersequity:

Totalfixedassets$1,118$1,035Preferredstock$39$39Commonstock（$1parvalue）5532Capitalsurplus347327Accumulatedretainedearnings390347Lesstreasurystock（26）（20）Totalequity$805$725Totalassets$1,879$1,742Totalliabilitiesandstockholdersequity$1,879$1,742Theassetsarelistedinorderbythelengthoftimeitwouldnormallytakeafirmwithongoingoperationstoconvertthemintocash.Clearly,cashismuchmoreliquidthanproperty,plant,andequipment.2-6BalanceSheetAnalysisoWhenanalyzingabalancesheet,theFinanceManagershouldbeawareofthreeconcerns:

1.Liquidity2.Debtversusequity3.Valueversuscost2-7LiquidityoReferstotheeaseandquicknesswithwhichassetscanbeconvertedtocashwithoutasignificantlossinvalueoCurrentassetsarethemostliquid.oSomefixedassetsareintangible.oThemoreliquidafirmsassets,thelesslikelythefirmistoexperienceproblemsmeetingshort-termobligations.oLiquidassetsfrequentlyhavelowerratesofreturnthanfixedassets.2-8DebtversusEquityoCreditorsgenerallyreceivethefirstclaimonthefirmscashflow.oShareholdersequityistheresidualdifferencebetweenassetsandliabilities.2-9ValueversusCostoUnderGenerallyAcceptedAccountingPrinciples（GAAP）,auditedfinancialstatementsoffirmsintheU.S.carryassetsatcost.oMarketvalueisthepriceatwhichtheassets,liabilities,andequitycouldactuallybeboughtorsold,whichisacompletelydifferentconceptfromhistoricalcost.2-102.2TheIncomeStatementoMeasuresfinancialperformanceoveraspecificperiodoftimeoTheaccountingdefinitionofincomeis:

RevenueExpensesIncome2-11U.S.C.C.IncomeStatementTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxesCurrent:

$71Deferred:

$13NetincomeAdditiontoretainedearnings$43Dividends:

$43Theoperationssectionoftheincomestatementreportsthefirmsrevenuesandexpensesfromprincipaloperations.$2,2621,65532790$19029$21949$17084$862-12Totaloperatingrevenues$2,262Costofgoodssold1,655Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$190Otherincome29Earningsbeforeinterestandtaxes$219Interestexpense49Pretaxincome$170Taxes84Current:

$71Deferred:

$13Netincome$86Additiontoretainedearnings:

$43Dividends:

$43Thenon-operatingsectionoftheincomestatementincludesallfinancingcosts,suchasinterestexpense.U.S.C.C.IncomeStatement2-13TotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxesCurrent:

$71Deferred:

$13NetincomeAdditiontoretainedearnings:

$43Dividends:

$43Usuallyaseparatesectionreportstheamountoftaxesleviedonincome.$2,2621,65532790$19029$21949$17084$86U.S.C.C.IncomeStatement2-14TotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxesCurrent:

$71Deferred:

$13NetincomeRetainedearnings:

$43Dividends:

$43Netincomeisthe“bottomline.”$2,2621,65532790$19029$21949$17084$86U.S.C.C.IncomeStatement2-15IncomeStatementAnalysisoTherearethreethingstokeepinmindwhenanalyzinganincomestatement:

1.GenerallyAcceptedAccountingPrinciples（GAAP）2.Non-CashItems3.TimeandCosts2-16GAAPqThematchingprincipleofGAAPdictatesthatrevenuesbematchedwithexpenses.qThus,incomeisreportedwhenitisearned,eventhoughnocashflowmayhaveoccurred.2-17Non-CashItemsqDepreciationisthemostapparent.Nofirmeverwritesacheckfor“depreciation.”qAnothernon-cashitemisdeferredtaxes,whichdoesnotrepresentacashflow.qThus,netincomeisnotcash.2-18TimeandCostsqIntheshort-run,certainequipment,resources,andcommitmentsofthefirmarefixed,butthefirmcanvarysuchinputsaslaborandrawmaterials.qInthelong-run,allinputsofproduction（andhencecosts）arevariable.qFinancialaccountantsdonotdistinguishbetweenvariablecostsandfixedcosts.Instead,accountingcostsusuallyfitintoaclassificationthatdistinguishesproductcostsfromperiodcosts.2-192.3TaxesoTheonethingwecanrelyonwithtaxesisthattheyarealwayschangingoMarginalvs.averagetaxratesnMarginalthepercentagepaidonthenextdollarearnednAveragethetaxbill/taxableincomeoOthertaxes2-20MarginalversusAverageRatesoSupposeyourfirmearns$4millionintaxableincome.nWhatisthefirmstaxliability?

nWhatistheaveragetaxrate?

nWhatisthemarginaltaxrate?

oIfyouareconsideringaprojectthatwillincreasethefirmstaxableincomeby$1million,whattaxrateshouldyouuseinyouranalysis?

2-212.4NetWorkingCapitalqNetWorkingCapitalCurrentAssetsCurrentLiabilitiesNWCusuallygrowswiththefirm2-22U.S.C.C.BalanceSheet2010200920102009Currentassets:

CurrentLiabilities:

Cashandequivalents$140$107Accountspayable$213$197Accountsreceivable294270Notespayable5053Inventories269280Accruedexpenses223205Other5850Totalcurrentliabilities$486$455Totalcurrentassets$761$707Long-termliabilities:

Fixedassets:

Deferredtaxes$117$104Property,plant,andequipment$1,423$1,274Long-termdebt471458Lessaccumulateddepreciation（550）（460Totallong-termliabilities$588$562Netproperty,plant,andequipment873814Intangibleassetsandother245221Stockholdersequity:

Totalfixedassets$1,118$1,035Preferredstock$39$39Commonstock（$1parvalue）5532Capitalsurplus347327Accumulatedretainedearnings390347Lesstreasurystock（26）（20）Totalequity$805$725Totalassets$1,879$1,742Totalliabilitiesandstockholdersequity$1,879$1,742HereweseeNWCgrowto$275millionin2010from$252millionin2009.Thisincreaseof$23millionisaninvestmentofthefirm.$23million$275m=$761m-$486m$252m=$707-$4552-232.5FinancialCashFlowoInfinance,themostimportantitemthatcanbeextractedfromfinancialstatementsistheactualcashflowofthefirm.oSincethereisnomagicinfinance,itmustbethecasethatthecashflowreceivedfromthefirmsassetsmustequalthecashflowstothefirmscreditorsandstockholders.CF（A）CF（B）+CF（S）2-24U.S.C.C.FinancialCashFlowCashFlowoftheFirmOperatingcashflow$238（Earningsbeforeinterestandtaxesplusdepreciationminustaxes）Capitalspending-173（Acquisitionsoffixedassetsminussalesoffixedassets）Additionstonetworkingcapital-23Total$42CashFlowofInvestorsintheFirmDebt$36（Interestplusretirementofdebtminuslong-termdebtfinancing）Equity6（Dividendsplusrepurchaseofequityminusnewequityfinancing）Total$42OperatingCashFlow:

EBIT$219Depreciation$90CurrentTaxes-$71OCF$2382-25U.S.C.C.FinancialCashFlowCashFlowoftheFirmOperatingcashflow$238（Earningsbeforeinterestandtaxesplusdepreciationminustaxes）Capitalspending（Acquisitionsoffixedassetsminussalesoffixedassets）AdditionstonetworkingcapitalTotalCashFlowofInvestorsintheFirmDebt（Interestplusretirementofdebtminuslong-termdebtfinancing）Equity（Dividendsplusrepurchaseofequityminusnewequityfinancing）TotalCapitalSpendingPurchaseoffixedassets$198Salesoffixedassets-$25CapitalSpending$173-173-23$42$366$422-26U.S.C.C.FinancialCashFlowCashFlowoftheFirmOperatingcashflow$238（Earningsbeforeinterestandtaxesplusdepreciationminustaxes）Capitalspending（Acquisitionsoffixedassetsminussalesoffixedassets）AdditionstonetworkingcapitalTotalCashFlowofInvestorsintheFirmDebt（Interestplusretirementofdebtminuslong-termdebtfinancing）Equity（Dividendsplusrepurchaseofequityminusnewequityfinancing）TotalNWCgrewfrom$275millionin2010from$252millionin2009.Thisincreaseof$23millionistheadditiontoNWC.-173-23$42$366$422-27U.S.C.C.FinancialCashFlowCashFlowoftheFirmOperatingcashflow$238（Earningsbeforeinterestandtaxesplusdepreciationminustaxes）Capitalspending（Acquisitionsoffixedassetsminussalesoffixedassets）AdditionstonetworkingcapitalTotalCashFlowofInvestorsintheFirmDebt（Interestplusretirementofdebtminuslong-termdebtfinancing）Equity（Dividendsplusrepurchaseofequityminusnewequityfinancing）Total-173-23$42$366$422-28U.S.C.C.FinancialCashFlowCashFlowoftheFirmOperatingcashflow$238（Earningsbeforeinterestandtaxesplusdepreciationminustaxes）Capitalspending（Acquisitionsoffixedassetsminussalesoffixedassets）Additionstonet