公司理財管理及財務管理知識分析

1、Financial Statements and Cash FlowChapter 2Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin2-1Key Concepts and SkillsoUnderstand the information provided by financial statementsoDifferentiate between book and market valuesoKnow the difference between average an

2、d marginal tax ratesoKnow the difference between accounting income and cash flowoCalculate a firms cash flow2-2Chapter Outline2.1 The Balance Sheet2.2 The Income Statement2.3 Taxes2.4 Net Working Capital2.5 Financial Cash Flow2.6 The Accounting Statement of Cash Flows2.7 Cash Flow Management2-3Sourc

3、es of InformationoAnnual reportsoWall Street JournaloInternetnNYSE ()nNASDAQ ()nTextbook ()oSECnEDGARn10K & 10Q reports2-42.1 The Balance SheetqAn accountants snapshot of the firms accounting value at a specific point in timeqThe Balance Sheet Identity is:Assets Liabilities + Stockholders Equity

4、2-5U.S. Composite Corporation Balance Sheet2010200920102009Current assets:Current Liabilities: Cash and equivalents$140$107 Accounts payable$213$197 Accounts receivable294270 Notes payable5053 Inventories269280 Accrued expenses223205 Other5850 Total current liabilities$486$455 Total current assets$7

5、61$707Long-term liabilities:Fixed assets: Deferred taxes$117$104 Property, plant, and equipment$1,423$1,274 Long-term debt471458 Less accumulated depreciation(550)(460) Total long-term liabilities$588$562 Net property, plant, and equipment873814 Intangible assets and other245221Stockholders equity:

6、Total fixed assets$1,118$1,035 Preferred stock$39$39 Common stock ($1 par value)5532 Capital surplus347327 Accumulated retained earnings390347 Less treasury stock(26)(20) Total equity$805$725Total assets$1,879$1,742Total liabilities and stockholders equity $1,879$1,742The assets are listed in order

7、by the length of time it would normally take a firm with ongoing operations to convert them into cash.Clearly, cash is much more liquid than property, plant, and equipment.2-6Balance Sheet AnalysisoWhen analyzing a balance sheet, the Finance Manager should be aware of three concerns:LiquidityDebt ve

8、rsus equityValue versus cost2-7Liquidity oRefers to the ease and quickness with which assets can be converted to cashwithout a significant loss in valueoCurrent assets are the most liquid.oSome fixed assets are intangible.oThe more liquid a firms assets, the less likely the firm is to experience pro

9、blems meeting short-term obligations.oLiquid assets frequently have lower rates of return than fixed assets.2-8Debt versus EquityoCreditors generally receive the first claim on the firms cash flow.oShareholders equity is the residual difference between assets and liabilities.2-9Value versus CostoUnd

10、er Generally Accepted Accounting Principles (GAAP), audited financial statements of firms in the U.S. carry assets at cost.oMarket value is the price at which the assets, liabilities, and equity could actually be bought or sold, which is a completely different concept from historical cost.2-102.2 Th

11、e Income StatementoMeasures financial performance over a specific period of timeoThe accounting definition of income is:Revenue Expenses Income2-11U.S.C.C. Income Statement Total operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther income

12、Earnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Addition to retained earnings $43 Dividends: $43The operations section of the income statement reports the firms revenues and expenses from principal operations.$2,262 1,655 327 90$190 29$219 49

13、$170 84$862-12Total operating revenues$2,262Cost of goods sold 1,655Selling, general, and administrative expenses 327Depreciation 90Operating income$190Other income29Earnings before interest and taxes$219Interest expense 49Pretax income$170Taxes 84 Current: $71 Deferred: $13Net income$86 Addition to

14、 retained earnings: $43 Dividends: $43The non-operating section of the income statement includes all financing costs, such as interest expense.U.S.C.C. Income Statement2-13Total operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther incomeE

15、arnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Addition to retained earnings: $43 Dividends: $43Usually a separate section reports the amount of taxes levied on income.$2,262 1,655 327 90$19029$219 49$170 84$86U.S.C.C. Income Statement2-14Tot

16、al operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther incomeEarnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Retained earnings: $43 Dividends: $43Net income is the “bottom line.”$

17、2,262 1,655 327 90$19029$219 49$170 84$86U.S.C.C. Income Statement2-15Income Statement AnalysisoThere are three things to keep in mind when analyzing an income statement:Generally Accepted Accounting Principles (GAAP)Non-Cash Items1.Time and Costs2-16GAAPqThe matching principle of GAAP dictates that

18、 revenues be matched with expenses. qThus, income is reported when it is earned, even though no cash flow may have occurred.2-17Non-Cash ItemsqDepreciation is the most apparent. No firm ever writes a check for “depreciation.”qAnother non-cash item is deferred taxes, which does not represent a cash f

19、low.qThus, net income is not cash.2-18Time and CostsqIn the short-run, certain equipment, resources, and commitments of the firm are fixed, but the firm can vary such inputs as labor and raw materials.qIn the long-run, all inputs of production (and hence costs) are variable.qFinancial accountants do

20、 not distinguish between variable costs and fixed costs. Instead, accounting costs usually fit into a classification that distinguishes product costs from period costs.2-192.3 TaxesoThe one thing we can rely on with taxes is that they are always changingoMarginal vs. average tax ratesnMarginal the p

21、ercentage paid on the next dollar earnednAverage the tax bill / taxable incomeoOther taxes2-20Marginal versus Average Rates oSuppose your firm earns $4 million in taxable income.nWhat is the firms tax liability?nWhat is the average tax rate?nWhat is the marginal tax rate?oIf you are considering a pr

22、oject that will increase the firms taxable income by $1 million, what tax rate should you use in your analysis?2-212.4 Net Working CapitalqNet Working Capital Current Assets Current LiabilitiesoNWC usually grows with the firm 2-22U.S.C.C. Balance Sheet2010200920102009Current assets:Current Liabiliti

23、es: Cash and equivalents$140$107 Accounts payable$213$197 Accounts receivable294270 Notes payable5053 Inventories269280 Accrued expenses223205 Other5850 Total current liabilities$486$455 Total current assets$761$707Long-term liabilities:Fixed assets: Deferred taxes$117$104 Property, plant, and equip

24、ment$1,423$1,274 Long-term debt471458 Less accumulated depreciation(550)(460 Total long-term liabilities$588$562 Net property, plant, and equipment873814 Intangible assets and other245221Stockholders equity: Total fixed assets$1,118$1,035 Preferred stock$39$39 Common stock ($1 par value)5532 Capital

25、 surplus347327 Accumulated retained earnings390347 Less treasury stock(26)(20) Total equity$805$725Total assets$1,879$1,742Total liabilities and stockholders equity $1,879$1,742Here we see NWC grow to $275 million in 2010 from $252 million in 2009. This increase of $23 million is an investment of th

26、e firm.$23 million$275m = $761m- $486m$252m = $707- $4552-232.5 Financial Cash FlowoIn finance, the most important item that can be extracted from financial statements is the actual cash flow of the firm.oSince there is no magic in finance, it must be the case that the cash flow received from the fi

27、rms assets must equal the cash flows to the firms creditors and stockholders.CF(A) CF(B) + CF(S) 2-24U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending -173 (Acquisitions of fixed assets minus sa

28、les of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42Operating Cash Flow:EBIT$219Depreciation $90Curr

29、ent Taxes -$71OCF$2382-25U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital TotalCash Flow of Investors

30、in the FirmDebt (Interest plus retirement of debt minus long-term debt financing)Equity (Dividends plus repurchase of equity minus new equity financing) TotalCapital SpendingPurchase of fixed assets $198Sales of fixed assets -$25Capital Spending $173-173-23$42$366$422-26U.S.C.C. Financial Cash FlowC

31、ash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital TotalCash Flow of Investors in the FirmDebt (Interest plus retirement of debt minu

32、s long-term debt financing)Equity (Dividends plus repurchase of equity minus new equity financing) TotalNWC grew from $275 million in 2010 from $252 million in 2009.This increase of $23 million is the addition to NWC.-173-23$42$366$422-27U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cas

33、h flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital TotalCash Flow of Investors in the FirmDebt (Interest plus retirement of debt minus long-term debt financing)Equity

34、 (Dividends plus repurchase of equity minus new equity financing) Total-173-23$42$366$422-28U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed a

35、ssets)Additions to net working capital TotalCash Flow of Investors in the FirmDebt (Interest plus retirement of debt minus long-term debt financing)Equity (Dividends plus repurchase of equity minus new equity financing) TotalCash Flow to CreditorsInterest$49Retirement of debt 73Debt service122Procee

36、ds from new debt sales -86Total $36-173-23$42$366$422-29U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capit

37、al TotalCash Flow of Investors in the FirmDebt (Interest plus retirement of debt minus long-term debt financing)Equity (Dividends plus repurchase of equity minus new equity financing) TotalCash Flow to StockholdersDividends $43Repurchase of stock 6Cash to Stockholders 49Proceeds from new stock issue

38、 -43Total $6-173-23$42$366$422-30U.S.C.C. Financial Cash FlowCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital TotalCash Flow of In

39、vestors in the FirmDebt (Interest plus retirement of debt minus long-term debt financing)Equity (Dividends plus repurchase of equity minus new equity financing) Total)()()(SCFBCFACFThe cash flow received from the firms assets must equal the cash flows to the firms creditors and stockholders:-173-23$

40、42$366$422-312.5 The Statement of Cash FlowsoThere is an official accounting statement called the statement of cash flows.oThis helps explain the change in accounting cash, which for U.S. Composite is $33 million in 2010.oThe three components of the statement of cash flows are:nCash flow from operat

41、ing activitiesnCash flow from investing activitiesnCash flow from financing activities2-32U.S.C.C. Cash Flow from OperationsTo calculate cash flow from operations, start with net income, add back non-cash items like depreciation and adjust for changes in current assets and liabilities (other than ca

42、sh).OperationsNet IncomeDepreciationDeferred TaxesChanges in Assets and LiabilitiesAccounts ReceivableInventoriesAccounts PayableAccrued ExpensesOtherTotal Cash Flow from Operations$869013-24111618$202-82-33U.S.C.C. Cash Flow from InvestingCash flow from investing activities involves changes in capi

43、tal assets: acquisition of fixed assets and sales of fixed assets (i.e., net capital expenditures).Acquisition of fixed assetsSales of fixed assetsTotal Cash Flow from Investing Activities-$19825-$1732-34U.S.C.C. Cash Flow from FinancingCash flows to and from creditors and owners include changes in equity and debt.Retirement of debt (includes notes)Proceeds from long-term debt sales-$73 86Total Cash Flow from Financing $4DividendsRepurchase of stock-43Proceeds from new stock issue 43-6 Change in notes payable -32-35U.