大连海事,财务管理研究生公司理财Chapter02.ppt

Financial Statements, Taxes, and Cash Flows 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 Chapter Outline The Balance Sheet The Income Statement Taxes Cash Flow 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 liquidity Ease of conversion to cash Without significant loss of value Balance Sheet Identity Assets = Liabilities + Stockholders’ Equity Net Working Capital and Liquidity Net Working Capital Current Assets – Current Liabilities Positive when the cash that will be received over the next 12 months exceeds the cash that will be paid out Usually positive in a healthy firm Liquidity Ability to convert to cash quickly without a significant loss in value Liquid firms are less likely to experience financial distress But liquid assets earn a lower return Trade-off to find balance between liquid and illiquid assets US Corporation Balance Sheet – Table 2.1 Market Vs. Book Value The balance sheet provides the book value of the assets, liabilities and equity. Market value is the price at which the assets, liabilities or equity can actually be bought or sold. Market value and book value are often very different. Why? Which is more important to the decision-making process? Example 2.2 Klingon Corporation Income Statement The income statement is more like a video of the firm’s operations for a specified period of time. You generally report revenues first and then deduct any expenses for the period Matching principle – GAAP say to show revenue when it accrues and match the expenses required to generate the revenue US Corporation Income Statement – Table 2.2 Work the Web Example Publicly traded companies must file regular reports with the Securities and Exchange Commiss