《金融学》答案第三章 财务报表的理解与预测.doc

CHAPTER 3 INTERPRETING AND FORECASTING FINANCIAL STATEMENTS Objectives To contrast the economic and accounting models of the firm. To show how accounting information can be useful to the financial decision maker when used with care. To understand the purpose and process of financial planning. To understand why firms need working capital and how to manage it so as to maximize shareholder value. Outline 3.1 Functions of Financial Statements 3.2 Review of Financial Statements 3.3 Market Values Versus Book Values 3.4 Accounting versus Economic Measures of Income 3.5 Returns to Shareholders versus Return on Book Equity 3.6 Analysis Using Financial Ratios 3.7 The Financial Planning Process 3.8 Constructing a Financial Planning Model 3.9 Growth and the Need for External Financing 3.10 Working Capital Management 3.11 Liquidity and Cash Budgeting Summary Financial statements serve three important economic functions: They provide information to the owners and creditors of the firm about the company’s current status and past financial performance. They provide a convenient way for owners and creditors to set performance targets and impose restrictions on the managers of the firm. They provide convenient templates for financial planning. The basic accounting statements reviewed are the income statement, the balance sheet, and the statement of cash flows. The income statement reports the results of operations over the period, and is based on the model of revenues minus costs (including depreciation and taxes) equals net income or earnings. The balance sheet shows the assets (both current and long-term (fixed) assets) on the one hand, and the claims against these (i.e., the liabilities and equity), on the other. The statement of cash flows gives a summary of cash flows from operating, investing, and financing activities for the period. A firm’s accounting balance sheet differs from an economic balance sheet because: It omits some economically significant assets and liabiliti