unlocking financial statements - day 3
DESCRIPTION
Jimmy Gentry presents "Unlocking Financial Statements - Day 3," a business journalism Webinar for the Donald W. Reynolds National Center for Business Journalism. To learn more about free training for business journalists, please visit businessjournalism.org.TRANSCRIPT
Online SeminarDay 3
July 20, 2011
UnlockingFinancial
Statements
Understanding Financial Statements2
An Online Seminar Presented By
Donald W. Reynolds National Center
For Business Journalism
At Arizona State University
Understanding Financial Statements3
Presented By
James K. Gentry, Ph.D. Clyde M. Reed Teaching Professor School of Journalism and Mass Communication University of Kansas [email protected]
Schedule for Week Day 1: Introduction to financial
statements Day 2: Income statement Day 3: Balance sheet Day 4: Cash flows Day 5: Beyond the basics
Understanding Financial Statements4
Understanding Financial Statements5
Balance Sheet
Understanding Financial Statements6
Balance Sheet It balances Assets = Liabilities + Shareholders’
Equity
Understanding Financial Statements7
Assets Current assets
Cash and cash equivalents Accounts receivable Inventories Prepaids
Investments and other assets
Understanding Financial Statements8
Assets Property, plant and equipment, net
Land and improvement Buildings and improvements Equipment Less accumulated depreciation
Goodwill and other intangibles
Understanding Financial Statements9
Goodwill Difference between what a firm pays to buy
another company and the book value (total assets minus total liabilities) of that company.
Has been written off over time, typically 40 years
No longer amortize Other intangible assets will continue to be
amortized over useful lives
Understanding Financial Statements10
Impairment Instead of writing off over time, now use
“impairment testing” The impairment is expensed on the
income statement
Understanding Financial Statements11
Liabilities Current liabilities
Accounts payable Accrued liabilities Income taxes Current maturity of long-term debt
Noncurrent liabilities Long-term debt Deferred income taxes
Commitments and contingencies
Shareholders’ Equity
Understanding Financial Statements12
Capital stock Preferred stock Common stock
Additional paid-in capital Retained earnings Treasury stock
Total shareholders’ equity Total L + OE