Ch2Accounting statements and Cash flows(澳大利亞新英格蘭大學(xué)公司金融課件)

1、Accounting statements and Cash flowsBalance SheetComponents of balance sheetCurrent assetsFixed assets( tangible )( intangible )Current liabilitiesLong-term debtShareholders equityNet working capital Snapshot of firms accounting value at a particular dateBalance Sheet (continue)Assets are listed in

2、the order of accounting liquidityLiabilities and equity are listed in the order in which they must be repaidDebt service is contracted payments of principle and interest on debt - put the firm in default if not paidAccounting value (historical cost of assets) does not reflect market value of assetsM

3、any valuable assets do not appear in the balance sheet :- good management practice, good reputation, etc.Table 1 Balance Sheet of US Composite Corp. 19x2 and 19x1 ($million)19X219X1AssetsCurrent assets :Cash and equivalents140107Accounts receivable294270Inventories269280Other5850Total current assets

4、761707Fixed assets :Property, plant, equipment14231274Less accumulated depreciation-550-460Net property, plant, equipment873814Intangible and other assets245221Total fixed assets11181035Total assets1879174219X219X1Liabilities and shareholders equityCurrent liabilities :Accounts payable213197Notes pa

5、yable5053Accrued expenses223205Total current liabilities486455Long-term liabilities :Deferred taxes117104Long-term debt471458Total long-term liabilities588562Stockholders equity :Preferred stock3939Common stock ($1 par value)5532Capital surplus347327Accumulated retained earnings390347Less treasury s

6、tock-26-20Total equity805725Total liabilities and shareholders equity18791742Table 1 Balance Sheet (continue)Income StatementMeasures performance of the firm over a specific periodAccounting definition of Income = Revenue - ExpensesRevenue is recorded upon an exchange of goods or services not count

7、unrealized appreciation of tangible assets. Expenses include some non-cash items- Depreciation change in value of existing assets and allowances for asset replacement or repair- Deferred taxes results from differences between accounting income and taxable incomeIncome Statement (continue) are classi

8、fied intoproduct coststotal production costraw material, labor, manufacturing overheadreported as cost of goods soldperiod costsallocated to a time period, for example, salariesreported as selling, general and administrative expensesDo not distinguish between variable (long run) costs and fixed (sho

9、rt run) costsTable 2 Income Statement of US Composite Corp. ($million) 19X2Total operating revenues2262Costs of goods sold-1655Selling, general and administrative expenses-327Depreciation-90Operating income190Other income29Earnings before interest and taxes (EBIT)219Interest expense-49Pre-tax income

10、170Taxes-84(Current)71(Deferred)13Net income86(Retained earnings)43(Dividends)43Financial Cash FlowFirmcurrent assetsfixed assetsFinancial Marketsshort term debtlong term debtequity sharesGovernmentFirm issues securitiesDividend & debt paymentsRetained cash flowTaxesFinancial Cash Flow (continue

11、)total cash flow = cash flow to debt + cash flow to equitycash flow to debt = debt service costs - new debt = ( interest + principle repaid ) - new debtcash flow to equity = dividends + stock repurchased - new stock issuesValue created if total cash flow money raisedCash flow is not equal to working

12、 capital- If you use cash to increase inventories, thencash decreases but working capital increasesworking capital = current assets - current liabilities- Depreciation allowances & deferred tax do not reduce cashTable 3 Financial Cash Flow of US Composite Corp. 19x2 ($million) Operating cash flo

13、w238EBIT + depreciation - current taxesCapital spending-173acquisitions of fixed assets - sales of fixed assetsAddition to net working capital-23Total42Debt36interest + retirement of debt - new long term debt financingEquity6dividends + repurchase of stock - proceeds from new stock salesTotal42Cash

14、flow of the firmCash flow to investorsFinancial cash flow = cash flow to debt + cash flow to equityTable 4 Statement of Cash Flows of US Composite Corp. 19x2Operating activitiesNet income86Depreciation90Deferred taxes13Changes in assets and liabilities = - investment in current net assets10Total cas

15、h flow from operating activities199Investing activitiesAcquisition of fixed assets-198Sales of fixed assets25Total cash flow from investing activities-173Financing activitiesRetirement of debt-73Preceeds from long term debt86Dividends-43Repurchase of stock-6Proceeds from new stock sales43Total cash flow from financing activities7Change in cash (on the balance sheet)33Financial Cash Flow (continue)Interest expense on income statement = Total financial cash flow + Total cash flow from financing activities = 42 (Table 3) + 7 (Ta