財務(wù)管理專業(yè)英語FinancialStatements課件

1、Financial StatementsChapter 2Financial StatementsChapter 22Chapter OutlineStatement of Financial Position (The Balance Sheet)Statement of Comprehensive Income (The Income Statement)Statement of cash flowSupplements to financial statements in annual reportthree important financial statements2Chapter

2、OutlineStatement of F3 Important financial statementsBalance-sheetIncome statementStatement of Cash flowAssetLiabilitiesShareholdersequityFinancial conditionsOperation resultCash flowRevenueExpensesIncomeCash inflowCash outflowNet cash flow3 Important financial statemen4Statement of Financial Positi

3、on (The Balance Sheet)The balance sheet is a snapshot of the firms assets and liabilities at a given point in timeAssets are listed in order of liquidityEase of conversion to cashWithout significant loss of valueBalance Sheet IdentityAssets = Liabilities + Stockholders Equity4Statement of Financial

4、PositiThe Balance-Sheet - T format Current AssetsNon-current assetFixed AssetsIntangiblesotherShareholders EquityCurrent LiabilitiesLong-Term DebtThe Balance-Sheet - T format AssetDefinitions and examples a resource controlled by the entity as a result of past events and from which future economic b

5、enefits are expected to flow to the entity. Examples are: cash at bank inventories (goods purchased but unsold at balance date) equipment for example computers vehicles ClassificationAssets are listed on the Balance Sheet and grouped (classified) according to their use and their liquidity.6 AssetDef

6、initioAsset : Current assetAn asset is considered current if:The business is holding the asset to trade it. For example, inventory. The business will turn the asset into cash during the next operating cycle, for example the amounts owed to the business by the credit customers, known as Accounts Rece

7、ivable. The item is cash or cash equivalent. An example of cash equivalent is money invested for one or two days. All other assets are classified as non-current.7Asset : Current assetAn assetAsset: Non-Current assetNon-Current Assets These have lives longer than current assets. They are assets of a

8、more permanent nature. Non-Current Assets are further divided (classified) into three groups:Property, Plant and Equipment; Intangible Assets; Investment Assets. These are the main assets used for earning revenue or for administrative purposes and are not intended for sale in the ordinary course of

9、business. 8Asset: Non-Current assetNon-CuAsset: Non-Current asset1. Property, Plant and Equipment(fixed asset)Fixed asset.mp3 These are the main assets used for earning revenue, and are not intended for sale in the ordinary course of business. PP&E are often shown in the financial statements at hist

10、orical cost (purchase price plus the cost of acquiring, installing and improving the asset) less depreciation (an expense amount to show the using up of the future economic benefit of the asset). Examples are: land and buildings ;plant and machinery ;vehicles furniture; fixtures and fittings (items

11、such as the shelves and counters in a shop).2. Intangible Assets Intangible asset.mp3These assets have no physical form you cant see or touch them, but they are of value to the entity as they will provide future economic benefit.Examples are: （Goodwill） ; Patents ;Franchises ; Copyright; Brands(trad

12、e mark); Business secret etc.3. Long-term Investment: These assets come from the additional cash funds that the business invests in income-earning securities. Examples are: funds on term deposit; shares in other companiesAsset: Non-Current asset1. ProLiability: Current liabilityDefinition of Liabili

13、ty : Liabilities are amounts owed by the business to others (the debts of the business that will be paid in the future). Classification: Liabilities are listed on the Balance Sheet and grouped (classified) according to when the payment will take place.Current Liabilities A liability is considered cu

14、rrent if: the business intends to pay the amount in the entitys normal operating cycle (usually 1year) Examples: Bank overdraft; accounts payable; short-term loan; notes payableLiability: Current liabilityDe Notes payable11 Notes payable11Liability: Non-current liabilityNon-Current LiabilitiesA liab

15、ility is considered non-current if they are not expected to be met within the next year (next accounting period) or within 12 months of balance sheet date. Examples are: The non-current portions of Mortgages and Loans If a business takes a loan for 3 years, the first third of the loan is current and

16、 the last two thirds is non-current Liability: Non-current liabiliEquityDefinition: Equity (also known as owners equity, capital or proprietorship) is the owners investment in the business. Revised accounting equation: A-L = E Equity then is the difference between the assets and liabilities of the b

17、usiness the net assets and so is a residual interest in the assets of the entity after deducting all its liabilities. Sources of Equity: Investment by the owner (Paid-in capital( common stock), paid in surplus) Profits arising from the everyday operations of the business. (Retained earnings)EquityDe

18、finition:14 Debt vs. equityThe basic feature of a debt is that it is a promise by the borrowing firm to repay a fixed dollar amount of by a certain date.The shareholders claim on firm value is the residual amount that remains after the debtholders are paid.If the value of the firm is less than the a

19、mount promised to the debtholders, the shareholders get nothing.14 Debt vs. eq15Debt and Equity as Contingent Claims$F$FPayoff to debt holdersValue of the firm (X)Debt holders are promised $F. If the value of the firm is less than $F, they get the whatever the firm if worth. If the value of the firm

20、 is more than $F, debt holders get a maximum of $F. $FPayoff to shareholdersValue of the firm (X)If the value of the firm is less than $F, share holders get nothing. If the value of the firm is more than $F, share holders get everything above $F. Algebraically, the bondholders claim is: Min$F,$XAlge

21、braically, the shareholders claim is: Max0,$X $F15Debt and Equity as Contingen16$F$FCombined Payoffs to debt holders and shareholdersValue of the firm (X)Debt holders are promised $F. Payoff to debt holdersPayoff to shareholdersIf the value of the firm is less than $F, the shareholders claim is: Max

22、0,$X $F = $0 and the debt holders claim is Min$F,$X = $X. The sum of these is = $XIf the value of the firm is more than $F, the shareholders claim is: Max0,$X $F = $X $F and the debt holders claim is: Min$F,$X = $F. The sum of these is = $XCombined Payoffs to Debt and Equity16$F$FCombined Payoffs to

23、 debt17Sample balance-sheet-vertical format17Sample balance-sheet-vertica18Statement of Comprehensive Income (income statement)The income statement is more like a video of the firms operations for a specified period of time.You generally report revenues first and then deduct any expenses for the per

24、iodMatching principle GAAP say to show revenue when it accrues and match the expenses required to generate the revenue18Statement of Comprehensive IElements of Income statementIncome: Income includes Revenue, Other Income and Gains. Classification:Revenue is the inflow of cash from the ordinary acti

25、vities of the business-that is from the main activity of the business. Examples are: sales (cash or credit) from the sale of goods fees (cash or credit) from the sale of services19Elements of Income statementInOther income will result in an inflow of cash or increase of economic benefit but from act

26、ivities that are not the main activities of the business. Examples are: interest from an investment dividends from shares in other companies rent from hiring an unused portion of the building.Gains are the other items that increase cash or economic benefit. An example is gain on sale of equipment wh

27、en the equipment is sold for more than it is valued in the business records.20Elements of Income statementOther income will result in anExpenses are the outflow of resources including cash from the ordinary activity of the business and also losses. Examples are: rent; wages; electricity; interests e

28、tcClassification Expenses can be classified according to their: function (trading expenses; selling and distribution costs; administrative expenses; finance costs and other expenses) INCOME LESS EXPENSES = PROFIT (or Loss) FOR THE PERIOD 21Elements of Income statementExpenses are the outflow of reSa

29、mple income statement22Sample income statement2223Work the Web ExamplePublicly traded companies must file regular reports with the Securities and Exchange CommissionThese reports are usually filed electronically and can be searched at the SEC public site called EDGAR23Work the Web ExamplePublicly24T

30、axesThe one thing we can rely on with taxes is that they are always changingMarginal vs. average tax ratesMarginal the percentage paid on the next dollar earnedAverage the tax bill / taxable income24TaxesThe one thing we can re25Corporate tax ratesTaxable income Tax rate 0 - 50,000 15% 50,001 - 75,0

31、00$7,500 + 25% Of the amount over 50,000 75,001 - 100,000$13,750 + 34% Of the amount over 75,000 100,001- 335,000 $22,250 + 39% Of the amount over 100,000 335,001- 10,000,000 $113,900 + 34% Of the amount over 335,000 10,000,001- 15,000,000$3,400,000 + 35% Of the amount over 10,000,000 15,000,001- 18

32、,333,333$5,150,000 + 38% Of the amount over 15,000,000 18,333,334+ 3525Corporate tax ratesTaxable i26Example: Marginal Vs. Average RatesSuppose your firm earns $0.15 million in taxable income.What is the firms tax liability?What is the average tax rate?What is the marginal tax rate?If you are consid

33、ering a project that will increase the firms taxable income by $1 million, what tax rate should you use in your analysis?26Example: Marginal Vs. Averag27 Statement of Cash FlowsProvides information about cash receipts and cash paymentsSummarizes for period: month, quarter, year.Cash effects of opera

34、ting, investing, and financing activities.27 Statement of Cash FlowsP28 Statement of Cash FlowsWhere did the cash come from?How was cash used during the period?What was the change in the cash balance during the period?A company cannot survive without cash!28 Statement of Cash FlowsW29Statement of Ca

35、sh FlowsAgrees with Statement of Financial Position29Statement of Cash FlowsAgree30Supplements to the Financial Statements in an Annual ReportManagement Discussion and AnalysisNotes to Financial StatementsAuditors report30Supplements to the Financial31Managements Discussion and Analysis covers three items:LiquidityCapital resourcesResults of operations31Managements Discussion and 32Managements Discussion and Analysis32Managements