光華財(cái)務(wù)管理講義 Lecture02

Lecture2AccountingStatementsandCashFlowSourcesofInformationAnnualreportsWallStreetJournalInternetNYSE(nyse)Nasdaq(nasdaq)Text(mhhe/cj)SECEDGAR10K&10Qreports新浪財(cái)經(jīng)和訊2.1TheBalanceSheetAnaccountant’ssnapshotofthefirm’saccountingvalueasofaparticulardateTheBalanceSheetIdentityis:BalanceSheetAnalysisWhenanalyzingabalancesheet,thefinancialmanagershouldbeawareofthreeconcerns:AccountingliquidityDebtversusequityValueversuscostTheBalanceSheetoftheU.S.CompositeCorporation(in$millions)20X2and20X1BalanceSheetU.S.COMPOSITECORPORATIONLiabilities(Debt)Assets20X220X1andStockholder'sEquity20X220X1Currentassets:CurrentLiabilities:

Cashandequivalents$140$107

Accountspayable$213$197

Accountsreceivable294270

Notespayable5053

Inventories269280

Accruedexpenses223205

Other5850

Totalcurrentliabilities$486$455

Totalcurrentassets$761$707Long-termliabilities:Fixedassets:

Deferredtaxes$117$104

Property,plant,andequipment$1,423$1,274

Long-termdebt471458

Lessaccumulateddepreciation-550-460

Totallong-termliabilities$588$562

Netproperty,plant,andequipment873814

Intangibleassetsandother245221Stockholder'sequity:

Totalfixedassets$1,118$1,035

Preferredstock$39$39

Commonstock($1pervalue)5532

Capitalsurplus347327

Accumulatedretainedearnings390347

Lesstreasurystock-26-20

Totalequity$805$725Totalassets$1,879$1,742Totalliabilitiesandstockholder'sequity$1,879$1,742Theassetsarelistedinorderbythelengthoftimeitnormallywouldtakeafirmwithongoingoperationstoconvertthemintocash.Clearly,cashismuchmoreliquidthanproperty,plantandequipment.AccountingLiquidityReferstotheeaseandquicknesswithwhichassetscanbeconvertedtocash.Currentassetsarethemostliquid.Somefixedassetsareintangible.Themoreliquidafirm’sassets,thelesslikelythefirmistoexperienceproblemsmeetingshort-termobligations.Liquidassetsfrequentlyhavelowerratesofreturnthanfixedassets.DebtversusEquityGenerally,whenafirmborrowsitgivesthebondholdersfirstclaimonthefirm’scashflow.Thusshareholder’sequityistheresidualdifferencebetweenassetsandliabilities.ValueversusCostUnderGAAPauditedfinancialstatementsoffirmsintheU.S.carryassetsatcost.Marketvalueisacompletelydifferentconcept.TheBalanceSheetBalancesheetreportsbookvaluesofassetsandliabilities(GAAP)Financialmanagerscareprimarilyaboutmarketvalues

--Forcurrentassets,currentliabilities,andmostdebtliabilitiesthedistinctionisunimportant --Forfixedassetsandequity,thedistinctionisoftenveryimportantTheBalanceSheet(continued)Exampleswherebookvaluesmarketvalues

--Youngfirmswithsignificantgrowthprospects --FirmswithrecentlypurchasedobsoleteequipmentBasicaccountingidentity

Assets=Liabilities+Stockholder’sequityThisidentityholdsbothforbookvaluesandformarketvaluesTheBalanceSheet(continued)Howdoestheaccountingvalueoftheequityaccountsincrease?BreakdownofcommonequityaccountCommonstock(parvalue)Paidincapital(excessoverpar)RetainedearningsTreasurystock2.2TheIncomeStatementTheincomestatementmeasuresperformanceoveraspecificperiodoftime.TheaccountingdefinitionofincomeisU.S.C.C.IncomeStatement(in$millions)20X2IncomeStatementU.S.COMPOSITECORPORATIONTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxes

Current:$71

Deferred:$13Netincome

Retainedearnings:$43

Dividends:$43Theoperationssectionoftheincomestatementreportsthefirm’srevenuesandexpensesfromprincipaloperations$2,262-1,655-327-90$19029$219-49$170-84$86(in$millions)20X2IncomeStatementU.S.COMPOSITECORPORATIONTotaloperatingrevenues$2,262Costofgoodssold-1,655Selling,general,andadministrativeexpenses-327Depreciation-90Operatingincome$190Otherincome29Earningsbeforeinterestandtaxes$219Interestexpense-49Pretaxincome$170Taxes-84

Current:$71

Deferred:$13Netincome$86

Retainedearnings:$43

Dividends:$43Thenon-operatingsectionoftheincomestatementincludesallfinancingcosts,suchasinterestexpense.U.S.C.C.IncomeStatement(in$millions)20X2IncomeStatementU.S.COMPOSITECORPORATIONTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxes

Current:$71

Deferred:$13Netincome

Retainedearnings:$43

Dividends:$43Usuallyaseparatesectionreportsasaseparateitemtheamountoftaxesleviedonincome.$2,262-1,655-327-90$19029$219-49$170-84$86U.S.C.C.IncomeStatement(in$millions)20x2IncomeStatementU.S.COMPOSITECORPORATIONTotaloperatingrevenuesCostofgoodssoldSelling,general,andadministrativeexpensesDepreciationOperatingincomeOtherincomeEarningsbeforeinterestandtaxesInterestexpensePretaxincomeTaxes

Current:$71

Deferred:$13Netincome

Retainedearnings:$43

Dividends:$43Netincomeisthe“bottomline”.$2,262-1,655-327-90$19029$219-49$170-84$86U.S.C.C.IncomeStatementIncomeStatementAnalysisTherearethreethingstokeepinmindwhenanalyzinganincomestatement:GAAPNonCashItemsTimeandCostsGenerallyAcceptedAccountingPrinciplesGAAP ThematchingprincipalofGAAPdictatesthatrevenuesbematchedwithexpenses.Thus,incomeisreportedwhenitisearned,eventhoughnocashflowmayhaveoccurredAssetsales Revenue=priceyougetfortheasset(marketvalue) Cost=currentbookvalueoftheasset Sellingassetswheremarketvalue>bookvaluecangenerateincomeIncomeStatementAnalysisNonCashItemsRevenuesandcostsarenotalwayscashitemsDepreciationisthemostapparent.Nofirmeverwritesacheckfor“depreciation”.Anothernoncashitemisdeferredtaxes,whichdoesnotrepresentacashflow.

Examples: --sellgoodsforcreditratherthancash

IncomeStatementAnalysisTimeandCostsIntheshortrun,certainequipment,resources,andcommitmentsofthefirmarefixed,butthefirmcanvarysuchinputsaslaborandrawmaterials.Inthelongrun,allinputsofproduction(andhencecosts)arevariable.Financialaccountantsdonotdistinguishbetweenvariablecostsandfixedcosts.Instead,accountingcostsusuallyfitintoaclassificationthatdistinguishesproductcostsfromperiodcosts.2.3NetWorkingCapitalNWCisusuallygrowingwiththefirm.TheBalanceSheetoftheU.S.C.C.(in$millions)20X2and20X1BalanceSheetU.S.COMPOSITECORPORATIONLiabilities(Debt)Assets20X220X1andStockholder'sEquity20X220X1Currentassets:CurrentLiabilities:

Cashandequivalents$140$107

Accountspayable$213$197

Accountsreceivable294270

Notespayable5053

Inventories269280

Accruedexpenses223205

Other5850

Totalcurrentliabilities$486$455

Totalcurrentassets$761$707Long-termliabilities:Fixedassets:

Deferredtaxes$117$104

Property,plant,andequipment$1,423$1,274

Long-termdebt471458

Lessaccumulateddepreciation-550-460

Totallong-termliabilities$588$562

Netproperty,plant,andequipment873814

Intangibleassetsandother245221Stockholder'sequity:

Totalfixedassets$1,118$1,035

Preferredstock$39$39

Commonstock($1parvalue)5532

Capitalsurplus347327

Accumulatedretainedearnings390347

Lesstreasurystock-26-20

Totalequity$805$725Totalassets$1,879$1,742Totalliabilitiesandstockholder'sequity$1,879$1,742HereweseeNWCgrowto$275millionin20X2from$252millionin20X1.Thisincreaseof$23millionisaninvestmentofthefirm.$23million$275m=$761m-$486m$252m=$707-$4552.4FinancialCashFlowInfinance,themostimportantitemthatcanbeextractedfromfinancialstatementsistheactualcashflowofthefirm.Sincethereisnomagicinfinance,itmustbethecasethatthecashflowreceivedfromthefirm’sassetsmustequalthecashflowstothefirm’screditorsandstockholders.CashFlowsIncomeisnotthesamethingascashflowFinancialcalculationsdependoncashflow,notaccountingincome Example: Youpay$100millionforamachineinyear0 Incomestatementmaytreatthisasa$20millioncost5-years ClearlythereisadifferenceStatementofcashflowstellsanalystexactlywherecashcamein/wentoutofthefirmovertheyearFinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42OperatingCashFlow:EBIT $219Depreciation $90CurrentTaxes ($71)OCF $238FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42CapitalSpendingPurchaseoffixedassets $198Salesoffixedassets (25)CapitalSpending $173FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42NWCgrewfrom$275millionin20X2from$252millionin20X1.Thisincreaseof$23millionistheadditiontoNWC.FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42CashFlowtoCreditorsInterest $49Retirementofdebt73 Debtservice 122Proceedsfromnewdebtsales (86)Total 36FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42CashFlowtoStockholdersDividends $43Repurchaseofstock6 CashtoStockholders49Proceedsfromnewstockissue (43)Total $6FinancialCashFlowoftheU.S.C.C.(in$millions)20X2FinancialCashFlowU.S.COMPOSITECORPORATIONCashFlowoftheFirmOperatingcashflow$238(Earningsbeforeinterestandtaxes

plusdepreciationminustaxes)Capitalspending-173(Acquisitionsoffixedassets

minussalesoffixedassets)Additionstonetworkingcapital-23

Total$42CashFlowofInvestorsintheFirmDebt$36(Interestplusretirementofdebt

minuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseof

equityminusnewequityfinancing)

Total$42Thecashfromreceivedfromthefirm’sassetsmustequalthecashflowstothefirm’screditorsandstockholders:CashFlows(continued)Operatingcashflowshouldexcludegainsandsalesonassets,extraordinaryitems,etc.Allnon-cashitemsinoperatingcashflowarepickedupinadditionstonetworkingcapitalSomeofthefirm’sinvestmentactivityispickedupintheadditionstonetworkingcapitalentry(e.g.,inventories)FurtherbreakdownofthedataisoftennecessarydependingontheproblemathandAppendixTaxes

MarginalandaveragetaxrateTaxoperatinglosscarrybacksandcarryforwards

應(yīng)稅所得率下調(diào) 行業(yè) 應(yīng)稅所得率（%） 農(nóng)、林、牧、漁業(yè) 3-10 制造業(yè) 5-15 批發(fā)和零售貿(mào)易業(yè) 4-15 交通運(yùn)輸業(yè) 7-15 建筑業(yè) 8-20 飲食業(yè) 8-25 娛樂業(yè) 15-30 其他行業(yè) 10-30AppendixFinancialStatementAnalysisThingstoConsiderWhenUsingFinancialRatios

Whataspectsofthefirmareweattemptingtoanalyze?Whatinformationgoesintoaparticularratioandhowdoesthatinformationrelatetotheaspectofthefirmbeinganalyzed?Whatistheunitofmeasurements?(dollars?days?turns?)Benchmark:whata“good”ratiolooklike?A“bad”one?FinancialRatiosCategoriesofFinancialRatiosShort-termSolvency–abilitytopaybillsinshort-termActivity–abilitytoofthefirmtocontrolitsinvestmentinassetsFinancialLeverage–extenttowhichafirmreliesondebtProfitability–thebottomlineValueFinancialRatiosA