上海交通大学：《财务管理》教学资源（PPT课件，英文版）Chapter 2 Financial Statements, Taxes, and Cash Flow

Chapter 2 Financial Statements,Taxes,and Cash Flow 0

0 Chapter 2 Financial Statements, Taxes, and Cash Flow

Chapter Outline The Balance Sheet The Income Statement Taxes ■Cash Flow 1

1 Chapter Outline n The Balance Sheet n The Income Statement n Taxes n Cash Flow

Key Concepts and Skills Know the difference between book value and market value Know the difference between accounting income and cash flow Know the difference between average and marginal tax rates Know how to determine a firm's cash flow from its financial statements 2

2 Key Concepts and Skills n Know the difference between book value and market value n Know the difference between accounting income and cash flow n Know the difference between average and marginal tax rates n Know how to determine a firm’s cash flow from its financial statements

The Balance Sheet The balance sheet is a snapshot of the firm's assets and liabilities at a given point in time Assets are listed in order of decreasing liquidity a Ease of conversion to cash without significant loss of value Balance Sheet Identity Assets Liabilities Stockholders'Equity

3 The Balance Sheet n The balance sheet is a snapshot of the firm’s assets and liabilities at a given point in time n Assets are listed in order of decreasing liquidity § Ease of conversion to cash without significant loss of value n Balance Sheet Identity § Assets = Liabilities + Stockholders’ Equity

Figure 2.1 Total Value of Assets Total Value of Liabilities and Shareholders'Equity Net Working Current liabilities Capital Current assets Long-term debt Fixed assets 1.Tangible fixed assets 2. Intangible fixed Shareholders'equity assets 4

4 Figure 2.1

U.S.Corporation Balance Sheet- Table 2.1 U.S.CORPORATION Balance Sheets as of December 31,2007 and 2008 (in Millions) 2007 2008 2007 2008 Assets Liabilities and Owners'Equity Current assets Current liabilities Cash S104 $160 Accounts payable $232 $266 Accounts receivable 455 688 Notes payable 196 123 Inventory 553 555 Total $428 s389 Total $1,112 $1,403 Fixed assets Net fixed assets $1,644 $1,709 Long-term debt $408 S454 Owners'equity Common stock and paid-in surplus 600 640 Retained earnings 1,320 1,629 Total $1,920 $2,269 Total liabilities and Total assets $2,756 $3,112 owners'equity $2,756 $3,112 5

5 U.S. Corporation Balance Sheet – Table 2.1

Balance Sheet Analysis ■ When analyzing a balance sheet,the Finance Manager should be aware of three concerns: 1.Accounting liquidity 2. Debt versus equity 3.Value versus cost EURO-ZONE BONDS 6

6 Balance Sheet Analysis n When analyzing a balance sheet, the Finance Manager should be aware of three concerns: 1. Accounting liquidity 2. Debt versus equity 3. Value versus cost

Accounting Liquidity Refers to the ease and quickness with which assets can be converted to cash-without a significant loss in value ■ Current assets are the most liquid. ■ Some fixed assets are intangible. The more liquid a firm's assets,the less likely the firm is to experience problems meeting short- term obligations. Liquid assets frequently have lower rates of return than fixed assets

7 Accounting Liquidity n Refers to the ease and quickness with which assets can be converted to cash—without a significant loss in value n Current assets are the most liquid. n Some fixed assets are intangible. n The more liquid a firm’s assets, the less likely the firm is to experience problems meeting short￾term obligations. n Liquid assets frequently have lower rates of return than fixed assets

Debt versus Equity Creditors generally receive the first claim on the firm's cash flow. Q Shareholder's equity is the residual difference between assets and liabilities. 8

8 Debt versus Equity n Creditors generally receive the first claim on the firm’s cash flow. n Shareholder’s equity is the residual difference between assets and liabilities

Market vs.Book Value The balance sheet provides the book value of the assets,liabilities,and equity. Historical Cost Principle:Under Generally Accepted Accounting Principles(GAAP), audited financial statements of firms in the U.S. carry assets at cost. Market value is the price at which the assets,liabilities,or equity can actually be bought or sold which is a completely different concept from historical cost. 9

9 Market vs. Book Value n The balance sheet provides the book value of the assets, liabilities, and equity. q Historical Cost Principle: Under Generally Accepted Accounting Principles (GAAP), audited financial statements of firms in the U.S. carry assets at cost. n Market value is the price at which the assets, liabilities, or equity can actually be bought or sold , which is a completely different concept from historical cost