![Page 1: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/1.jpg)
Financial StatementsJason O’Bryan
30 January 2007
![Page 2: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/2.jpg)
Financial Statements• Financial statements are released
quarterly (10-Q) and annually (10-K).• You can usually find them in the annual
report available on the company website, or from Yahoo! Finance.
• Financial reporting is required by the SEC. The rules are established by GAAP, Generally Accepted Accounting Principles.
![Page 3: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/3.jpg)
Types of Statements• Balance Sheet
– Totals a company’s assets and liabilities.
• Income Statement– Reports on a company’s results of
operations, shows profit or loss.
• Cash Flow– Shows cash flows due to operating,
investing, and financing activities.
![Page 4: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/4.jpg)
Balance Sheet• Statement of the book value of a
company.• Main parts:
– Assets– Liabilities– Stockholders’ Equity
• Important Equation:– Assets = Liabilities + Stockholders’ Equity
![Page 5: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/5.jpg)
Assets• The most liquid assets are listed first.• Current Assets
– Assets expected to be converted to cash, sold, or consumed within 1 year or within the operating cycle.
– Cash, Short-term investments, Receivables, Inventory, Prepaid expenses
![Page 6: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/6.jpg)
Assets• Long-term Investments
– Investments in securities such as bonds, common stock, or long-term notes.
– Investments in fixed assets that are not used in operations (e.g. land held for sale)
– Investments in special funds (e.g. pension)– Investments in subsidiaries or affiliated
companies.
![Page 7: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/7.jpg)
Assets• Fixed Assets
– Tangible assets– PP&E (Property, Plant & Equipment)– Land, buildings, machinery, furniture, tools– Accumulated Depreciation
![Page 8: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/8.jpg)
Assets• Intangible Assets
– Patents– Copyrights– Goodwill– Trademarks
![Page 9: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/9.jpg)
Liabilities• Current Liabilities
– These are expected to be cleared within 1 year.
– Wages, accounts, taxes, accounts payable
• Long-term Liabilities– Long-term bonds, notes payable, leases,
pension obligations, product warranties
![Page 10: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/10.jpg)
Shareholders’ Equity• The stockholders’ interest in all assets
after all liabilities are paid.– Equals Assets minus Liabilities
• Equity increases when the book value of the business increases.– Assets Increase– Liabilities Decrease– Profits are realized– New shares are issued
![Page 11: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/11.jpg)
![Page 12: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/12.jpg)
Income Statement• Shows the profit or loss over a period.• Has two main categories, revenues and
expenses.– Revenues total up everything that was earned.– Expenses total up everything that was spent.
• The difference is Net Income.
![Page 13: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/13.jpg)
Income Statement• Typically categorized in 3 main
sections– Operating– Non-operating– Irregular items
![Page 14: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/14.jpg)
Operating Section• Calculates Operating Income• Revenue
– Inflows of assets, usually cash from sale of goods or services.
• Expenses– COGS – amount products cost to produce– G&A – expenses to manage the business
(officer salaries, legal fees, utilities, supplies)– Selling – advertising, shipping, commission– Research & Development
![Page 15: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/15.jpg)
Income Statement• Non-operating section
– Interest expensed and interest earned– Income tax– Any revenues or expenses not related to
the primary business operations.
• Irregular items– Discontinued operations– Extraordinary items (e.g. natural disasters)
![Page 16: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/16.jpg)
Income Statement• Net Income = Operating Income –
Additional expenses• EBIT – Earnings before interest & taxes
– A measure of earning power from operations– Amount of cash available to pay off creditors
• EBITDA – depreciation & amortization– Good for looking at companies with large
amounts of fixed assets (which are subject to heavy depreciation charges)
![Page 17: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/17.jpg)
![Page 18: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/18.jpg)
Cash Flow Statement• Shows incoming and outgoing money
during a particular period.• Broken down into 3 categories
– Operating activities– Investing activities– Financing activities
![Page 19: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/19.jpg)
Operating Activities• Production, sales, and delivery of the
company’s product as well as collecting payment from its customers.– Net Income from income statement– Depreciation– Working Capital– Deferred Tax
![Page 20: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/20.jpg)
Investing Activities• Purchase or sale of long-term assets.
– Buying new land– Building a new factory– Purchasing machinery
![Page 21: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/21.jpg)
Financing Activities• Cash flow from investors, such as
banks and shareholders– Dividends paid– Sale or purchase of stock– Bank loans, notes
![Page 22: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/22.jpg)
![Page 23: Financial Statements Jason O'Bryan 30 January 2007](https://reader034.vdocument.in/reader034/viewer/2022042607/559a32f81a28ab9c478b47ce/html5/thumbnails/23.jpg)
Questions?