© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin BASIC FINANCIAL STATEMENTS
12-Basic Financial Statement
Oct 29, 2014
12-Basic Financial Statement
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© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
BASIC FINANCIAL STATEMENTS
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Companies prepare interim financial statements and annual
financial statements.
2000
X
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Three primary financial
statements.Income Statement
Balance Sheet
Statement of Cash FlowsWe will use a corporation
to describe these statements.
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Describes where the enterprise stands at a
specific date.
Income Statement
Balance Sheet
Statement of Cash Flows
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Depicts the revenue and
expenses for a designated
period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Revenues result in positive
cash flow.
Expenses result in negative
cash flow.
Either in the past, present, or future.
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Net income (or net loss) is simply the difference between
revenues and expenses.
Income Statement
Balance Sheet
Statement of Cash Flows
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Introduction to Financial StatementsIntroduction to Financial Statements
Depicts the ways cash has changed during
a designated period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Balance sheet – provides a snapshot of a firm’s financial position at one point in time.
Income statement – summarizes a firm’s revenues and expenses over a given period of time.
Statement of retained earnings – shows how much of the firm’s earnings were retained, rather than paid out as dividends.
Statement of cash flows – reports the impact of a firm’s activities on cash flows over a given period of time.
The Annual ReportThe Annual Report
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Vagabond Travel AgencyBalance Sheet
December 31, 2002Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:Notes receivable 10,000 Notes payable 41,000$ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000$ Building 90,000 Owners' Equity:Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000 Total 300,000$ Total 300,000$
A Starting Point: Statement of Financial Position
A Starting Point: Statement of Financial Position
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Vagabond Travel AgencyBalance Sheet
December 31, 2002Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:Notes receivable 10,000 Notes payable 41,000$ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000$ Building 90,000 Owners' Equity:Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000 Total 300,000$ Total 300,000$
AssetsAssets
Assets are economic resources
that are owned by the business and are expected to provide positive
future cash flows.
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Vagabond Travel AgencyBalance Sheet
December 31, 2002Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:Notes receivable 10,000 Notes payable 41,000$ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000$ Building 90,000 Owners' Equity:Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000 Total 300,000$ Total 300,000$
LiabilitiesLiabilities
Liabilities are debts that
represent negative future cash flows
for the enterprise.
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Vagabond Travel AgencyBalance Sheet
December 31, 2002Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:Notes receivable 10,000 Notes payable 41,000$ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000$ Building 90,000 Owners' Equity:Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000 Total 300,000$ Total 300,000$
Owners’ EquityOwners’ Equity
Owners’ equity represents the
owner’s claim to the assets of the
business.
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Vagabond Travel AgencyBalance Sheet
December 31, 2002Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:Notes receivable 10,000 Notes payable 41,000$ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000$ Building 90,000 Owners' EquityOffice equipment 15,000 Capital stock 150,000
Retained earnings 70,000 Total 300,000$ Total 300,000$
The Accounting EquationThe Accounting Equation
Assets = Liabilities + Owners’ Equity
$300,000 = $80,000 + $220,000
Assets = Liabilities + Owners’ Equity
$300,000 = $80,000 + $220,000
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Balance Sheet: AssetsBalance Sheet: Assets
CashA/RInventories
Total CAGross FALess: Dep.
Net FATotal Assets
20027,282
632,1601,287,3601,926,8021,202,950 263,160 939,7902,866,592
200157,600
351,200 715,2001,124,000
491,000 146,200 344,8001,468,800
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Balance sheet: Liabilities and EquityBalance sheet: Liabilities and Equity
Accts payableNotes payableAccruals
Total CLLong-term debtCommon stockRetained earnings
Total EquityTotal L & E
2002524,160
636,808 489,6001,650,568
723,432460,000
32,592 492,5922,866,592
2001145,600200,000
136,000481,600323,432460,000
203,768 663,7681,468,800
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Income statementIncome statement
SalesCOGSOther expenses
EBITDADepr. & Amort.
EBITInterest Exp.EBTTaxesNet income
20026,034,000
5,528,000 519,988
(13,988) 116,960(130,948) 136,012(266,960) (106,784) (160,176)
20013,432,0002,864,000 358,672
209,328 18,900
190,428 43,828
146,600 58,640
87,960
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Other dataOther data
No. of sharesEPSDPSStock priceLease pmts
2002100,000-$1.602
$0.11$2.25
$40,000
2001100,000
$0.88$0.22$8.50
$40,000
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Statement of Retained Earnings (2002)
Statement of Retained Earnings (2002)
Balance of retained
earnings, 12/31/01
Add: Net income, 2002
Less: Dividends paid
Balance of retained
earnings, 12/31/02
$203,768(160,176
)
(11,000)
$32,592
© The McGraw-Hill Companies, Inc., 2002McGraw-Hill/Irwin
Statement of Cash Flows (2002)Statement of Cash Flows (2002)
OPERATING ACTIVITIESNet income
Add (Sources of cash):DepreciationIncrease in A/PIncrease in accruals
Subtract (Uses of cash):Increase in A/RIncrease in inventories
Net cash provided by ops.
(160,176)
116,960378,560353,600
(280,960)(572,160)(164,176)
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