第二章 会计报表与现金流量

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1. Chapter Outline2.1 The Balance Sheet 2.2 The Income Statement 2.3 Net Working Capital 2.4 Financial Cash Flow 2.5 Summary and Conclusions
2. Sources of InformationAnnual reports Wall Street Journal Internet NYSE (www.nyse.com) Nasdaq (www.nasdaq.com) Text (www.mhhe.com/cj) SEC EDGAR 10K & 10Q reports
3. 2.1 The Balance SheetAn accountant’s snapshot of the firm’s accounting value as of a particular date. The Balance Sheet Identity is: When analyzing a balance sheet, the financial manager should be aware of three concerns: accounting liquidity, debt versus equity, and value versus cost.
4. The Balance Sheet of the U.S. Composite Corporation(in $ millions)20X2 and 20X1Balance SheetU.S. COMPOSITE CORPORATIONLiabilities (Debt)Assets20X220X1and Stockholder's Equity20X220X1Current assets:Current Liabilities: Cash and equivalents$140$107 Accounts payable$213$197 Accounts receivable294270 Notes payable5053 Inventories269280 Accrued expenses223205 Other5850 Total current liabilities$486$455 Total current assets$761$707Long-term liabilities:Fixed assets: Deferred taxes$117$104 Property, plant, and equipment$1,423$1,274 Long-term debt471458 Less accumulated depreciation-550-460 Total long-term liabilities$588$562 Net property, plant, and equipment873814 Intangible assets and other245221Stockholder's equity: Total fixed assets$1,118$1,035 Preferred stock$39$39 Common stock ($1 per value)5532 Capital surplus347327 Accumulated retained earnings390347 Less treasury stock-26-20 Total equity$805$725Total assets$1,879$1,742Total liabilities and stockholder's equity$1,879$1,742The assets are listed in order by the length of time it normally would take a firm with ongoing operations to convert them into cash. Clearly, cash is much more liquid than property, plant and equipment.
5. Balance Sheet AnalysisWhen analyzing a balance sheet, the financial manager should be aware of three concerns: Accounting liquidity Debt versus equity Value versus cost
6. Accounting Liquidity Refers to the ease and quickness with which assets can be converted to cash. Current assets are the most liquid. Some fixed assets are intangible. The more liquid a firm’s assets, the less likely the firm is to experience problems meeting short-term obligations. Liquid assets frequently have lower rates of return than fixed assets.
7. Debt versus EquityGenerally, when a firm borrows it gives the bondholders first claim on the firm’s cash flow. Thus shareholder’s equity is the residual difference between assets and liabilities.
8. Value versus CostUnder GAAP audited financial statements of firms in the U.S. carry assets at cost. Market value is a completely different concept.
9. 2.2 The Income StatementThe income statement measures performance over a specific period of time. The accounting definition of income is
10. U.S.C.C. Income Statement (in $ millions)20X2Income StatementU.S. COMPOSITE CORPORATIONTotal operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther incomeEarnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Retained earnings: $43 Dividends: $43The operations section of the income statement reports the firm’s revenues and expenses from principal operations$2,262- 1,655- 327- 90$19029$219- 49$170- 84$86
11. (in $ millions)20X2Income StatementU.S. COMPOSITE CORPORATIONTotal operating revenues$2,262Cost of goods sold- 1,655Selling, general, and administrative expenses- 327Depreciation- 90Operating income$190Other income29Earnings before interest and taxes$219Interest expense- 49Pretax income$170Taxes- 84 Current: $71 Deferred: $13Net income$86 Retained earnings: $43 Dividends: $43The non-operating section of the income statement includes all financing costs, such as interest expense.U.S.C.C. Income Statement
12. (in $ millions)20X2Income StatementU.S. COMPOSITE CORPORATIONTotal operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther incomeEarnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Retained earnings: $43 Dividends: $43Usually a separate section reports as a separate item the amount of taxes levied on income.$2,262- 1,655- 327- 90$19029$219- 49$170- 84$86U.S.C.C. Income Statement
13. (in $ millions)20x2Income StatementU.S. COMPOSITE CORPORATIONTotal operating revenuesCost of goods soldSelling, general, and administrative expensesDepreciationOperating incomeOther incomeEarnings before interest and taxesInterest expensePretax incomeTaxes Current: $71 Deferred: $13Net income Retained earnings: $43 Dividends: $43Net income is the “bottom line”.$2,262- 1,655- 327- 90$19029$219- 49$170- 84$86U.S.C.C. Income Statement
14. Income Statement AnalysisThere are three things to keep in mind when analyzing an income statement: GAAP Non Cash Items Time and Costs
15. Generally Accepted Accounting PrinciplesGAAP The matching principal of GAAP dictates that revenues be matched with expenses. Thus, income is reported when it is earned, even though no cash flow may have occurred
16. Income Statement AnalysisNon Cash Items Depreciation is the most apparent. No firm ever writes a check for “depreciation”. Another noncash item is deferred taxes, which does not represent a cash flow.
17. Income Statement AnalysisTime and Costs In the short run, certain equipment, resources, and commitments of the firm are fixed, but the firm can vary such inputs as labor and raw materials. In the long run, all inputs of production (and hence costs) are variable. Financial accountants do not distinguish between variable costs and fixed costs. Instead, accounting costs usually fit into a classification that distinguishes product costs from period costs.
18. 2.3 Net Working CapitalNWC is usually growing with the firm.
19. The Balance Sheet of the U.S.C.C.(in $ millions)20X2 and 20X1Balance SheetU.S. COMPOSITE CORPORATIONLiabilities (Debt)Assets20X220X1and Stockholder's Equity20X220X1Current assets:Current Liabilities: Cash and equivalents$140$107 Accounts payable$213$197 Accounts receivable294270 Notes payable5053 Inventories269280 Accrued expenses223205 Other5850 Total current liabilities$486$455 Total current assets$761$707Long-term liabilities:Fixed assets: Deferred taxes$117$104 Property, plant, and equipment$1,423$1,274 Long-term debt471458 Less accumulated depreciation-550-460 Total long-term liabilities$588$562 Net property, plant, and equipment873814 Intangible assets and other245221Stockholder's equity: Total fixed assets$1,118$1,035 Preferred stock$39$39 Common stock ($1 par value)5532 Capital surplus347327 Accumulated retained earnings390347 Less treasury stock-26-20 Total equity$805$725Total assets$1,879$1,742Total liabilities and stockholder's equity$1,879$1,742Here we see NWC grow to $275 million in 20X2 from $252 million in 20X1. This increase of $23 million is an investment of the firm.$23 million$275m = $761m- $486m$252m = $707- $455
20. 2.4 Financial Cash FlowIn finance, the most important item that can be extracted from financial statements is the actual cash flow of the firm. Since there is no magic in finance, it must be the case that the cash from received from the firm’s assets must equal the cash flows to the firm’s creditors and stockholders.
21. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42Operating Cash Flow: EBIT $219 Depreciation $90 Current Taxes ($71) OCF $238
22. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42Capital Spending Purchase of fixed assets $198 Sales of fixed assets (25) Capital Spending $173
23. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42NWC grew from $275 million in 20X2 from $252 million in 20X1. This increase of $23 million is the addition to NWC.
24. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42
25. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42Cash Flow to Creditors Interest $49 Retirement of debt 73 Debt service 122 Proceeds from new debt sales (86) Total 36
26. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42Cash Flow to Stockholders Dividends $43 Repurchase of stock 6 Cash to Stockholders 49 Proceeds from new stock issue (43) Total $6
27. Financial Cash Flow of the U.S.C.C.(in $ millions)20X2Financial Cash FlowU.S. COMPOSITE CORPORATIONCash Flow of the FirmOperating cash flow$238 (Earnings before interest and taxes plus depreciation minus taxes)Capital spending-173 (Acquisitions of fixed assets minus sales of fixed assets)Additions to net working capital-23 Total$42Cash Flow of Investors in the FirmDebt$36 (Interest plus retirement of debt minus long-term debt financing)Equity6 (Dividends plus repurchase of equity minus new equity financing) Total$42The cash from received from the firm’s assets must equal the cash flows to the firm’s creditors and stockholders:
28. 2.5 Summary and ConclusionsFinancial statements provide important information regarding the value of the firm. You should keep in mind: Measures of profitability do not take risk or timing of cash flows into account. Financial ratios are linked to one another.