《基础金融》（英文版）CHAPTER 2 Financial Statements, Cash Flow, and Taxes

2-1 CHAPTER 2 Financial Statements Cash Flow, and Taxes ■Ba| ance sheet ■ Income statement Statement of cash flows Accounting income versus cash flow MVAand Eva ■ Persona| taxes Corporate taxes Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 1 Copyright © 2002 by Harcourt, Inc. All rights reserved. ◼Balance sheet ◼Income statement ◼Statement of cash flows ◼Accounting income versus cash flow ◼MVA and EVA ◼Personal taxes ◼Corporate taxes CHAPTER 2 Financial Statements, Cash Flow, and Taxes

2-2 Balance sheets: Assets 2001 2000 Cash 7,282 9,000 Short -term iny 0 48.600 AR 632,160351,200 Inventories 1287,360 715200 Total Ca 19268021,124.000 Gross FA 202,950491,000 Less: Depr. 263,160 146200 Net Fa 939790 344.800 Total assets 2.8665921468800 Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 2 Copyright © 2002 by Harcourt, Inc. All rights reserved. 2001 2000 Cash 7,282 9,000 Short-term inv. 0 48,600 AR 632,160 351,200 Inventories 1,287,360 715,200 Total CA 1,926,802 1,124,000 Gross FA 1,202,950 491,000 Less: Depr. 263,160 146,200 Net FA 939,790 344,800 Total assets 2,866,592 1,468,800 Balance Sheets: Assets

2-3 Liabilities and Equity 2001 2000 Accts payable 524.160145600 Notes payable 720.000200,000 Accruals 489600136000 Total CL 3733760481,600 Long-term debt 1,000,000 323, 432 Common stock 460,000460,000 Retained earnings )203768 Total equity 13283266376 Total l&E 2866592 680 Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 3 Copyright © 2002 by Harcourt, Inc. All rights reserved. 1,733,760 Liabilities and Equity 2001 2000 Accts payable 524,160 145,600 Notes payable 720,000 200,000 Accruals 489,600 136,000 Total CL 481,600 Long-term debt 1,000,000 323,432 Common stock 460,000 460,000 Retained earnings (327,168) 203,768 Total equity 132,832 663,768 Total L&E 2,866,592 1,468,800

2-4 Income statement 2001 2000 Sales 58344003,432,000 COGS 5728,0002,864,000 Other expenses 680.000340.000 Deprec 116960_18900 Tot op. costs 24960322 EBIT (690,560)209100 Interest exp. 76000 62500 EBT (866,560)146,600 Taxes(40%) (346,624)58640 Net income 519936 Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 4 Copyright © 2002 by Harcourt, Inc. All rights reserved. (519,936) Income Statement Sales 5,834,400 3,432,000 COGS 5,728,000 2,864,000 Other expenses 680,000 340,000 Deprec. 116,960 18,900 Tot. op. costs 6,524,960 3,222,900 EBIT (690,560) 209,100 Interest exp. 176,000 62,500 EBT (866,560) 146,600 Taxes (40%) (346,624) 58,640 Net income 87,960 2001 2000

2-5 Other data 20012000 No, of shares 100,000 100000 EPS ($5199) $088 DPS 0.110 $022 Stock price $225 $850 Lease pmts $40,000 $40,000 Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 5 Copyright © 2002 by Harcourt, Inc. All rights reserved. Other Data No. of shares 100,000 100,000 EPS ($5.199) $0.88 DPS $0.110 $0.22 Stock price $2.25 $8.50 Lease pmts $40,000 $40,000 2001 2000

2-6 Statement of Retained Earnings(2001) Balance of retained earnings, 12/31/00 $203768 Add: Net income, 2001(519, 936) Less: Dividends paid (11000 Balance of retained earnings, 12/31/01 ($327168) Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 6 Copyright © 2002 by Harcourt, Inc. All rights reserved. Statement of Retained Earnings (2001) Balance of retained earnings, 12/31/00 $203,768 Add: Net income, 2001 (519,936) Less: Dividends paid (11,000) Balance of retained earnings, 12/31/01 ($327,168)

2-7 Statement of cash Flows: 2001 OPERATING ACTIVITIES Net income (519,936) Adjustments Depreciation 116,960 Change in AR (280,960) Change in inventories (572,160) Change in AP 378560 Change in accruals 353600 Net cash provided by ops. (523, 936) Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 7 Copyright © 2002 by Harcourt, Inc. All rights reserved. Statement of Cash Flows: 2001 OPERATING ACTIVITIES Net Income (519,936) Adjustments: Depreciation 116,960 Change in AR (280,960) Change in inventories (572,160) Change in AP 378,560 Change in accruals 353,600 Net cash provided by ops. (523,936)

2-8 L-T INVESTING ACTIVITIES Investments in fixed assets (711,950) FINANCING ACTIVITIES Change in s-t investments 48.600 Change in notes payable 520,000 Change in long-term debt 676, 568 Payment of cash dividends (11,000 Net cash from financing 1,234,168 Sum: net change in cash 1718 Plus: cash at beginning of year 9,000 Cos 2 a eand nt y Harcourt year 28 All rights reserved

2 - 8 Copyright © 2002 by Harcourt, Inc. All rights reserved. L-T INVESTING ACTIVITIES Investments in fixed assets (711,950) FINANCING ACTIVITIES Change in s-t investments 48,600 Change in notes payable 520,000 Change in long-term debt 676,568 Payment of cash dividends (11,000) Net cash from financing 1,234,168 Sum: net change in cash (1,718) Plus: cash at beginning of year 9,000 Cash at end of year 7,282

2-9 What can you conclude about the company's financial condition from its statement of cash flows? Net cash from operations=-$523, 936, mainly because of negative net income The firm borrowed $1, 185, 568 and sold $48, 600 in short-term investments to meet its cash requirements Even after borrowing, the cash account fell by $1, 718. Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 9 Copyright © 2002 by Harcourt, Inc. All rights reserved. ◼Net cash from operations = -$523,936, mainly because of negative net income. ◼The firm borrowed $1,185,568 and sold $48,600 in short-term investments to meet its cash requirements. ◼Even after borrowing, the cash account fell by $1,718. What can you conclude about the company’s financial condition from its statement of cash flows?

2-10 What effect did the expansion have on net operating working capital(NOWC)? NOWC Operating Operating CA CL NOWCo1=($7,282+$632,160+51,287360) ($524,160+$489,600) =$913,042 NOWC00=$793,800 Copy right C 2002 by Harcourt, Inc. All rights reserved

2 - 10 Copyright © 2002 by Harcourt, Inc. All rights reserved. What effect did the expansion have on net operating working capital (NOWC)? NOWC01 = ($7,282 + $632,160 + $1,287,360) - ($524,160 + $489,600) = $913,042. NOWC00 = $793,800. = - Operating CA Operating CL NOWC