current assets

long term investments

PPE

intangible assets

current liabilities

long term liabilities

stockholders equity

expected to be converted to cash within 1 yr or operating cycle

- cash

- investments

- recievables

- inventories

- supplies

- prepaid expenses

* listed according to liquidiy

-investments in stock and bonds from others held for 1+ years

- long term assets (land not in use)

- long term notes recievable

- land, buildings, equipment, etc

+ (-)(depreciation)

obligations the co has to pay within the next operating cycle

- accts payable, salaries/w payable, income tax payable,notes payable,interest payable, unearned revenue

- current maturities (payments to be made in next year on lt obligations)

long term liabilities and examples

obligations the co has to pay after 1 year

- bonds payable

- mortgage payable

- lease liabilities

-pension liabilities

- measures net income earned on each share of common stock

- determines stockholders investment return

- comparisons across co's arent valuable because wide array of stock issued

eps = net income - pref. dividends 

_____________

avg common shares outstanding

Statement of Stockholders Equity

- rather than retained earnings statement bc it presents causes of changes to SE 

- repurchase, various dates, etc

- type of liquidity ratio

- the difference between amounts of current assets and current liabilities

working capital = current assets - current liabilities

-positive means they will be more likely able to pay off obligations 

- type of liquidity ratio

- more dependable indicator of liquidity than working capital

- 1:21 means that for every dollar of current liabilties, the co has $1.21 in assets

current ratio = current assets/ current liabilities

*weakness: doesnt say if assets are slow moving $$

Debt to Assets Ratio

- type of solvency ratio

- measures percentage of total financing provided by creditors rather than stockholders

- higher the percentage, the more risk

debt to assets ratio = total liabilities/total assets

59% means every dollar of assets was financed by .59 of debt

*stable incomes can support this (think electrical)

net cash provided by o.a. for capital expenditures and dividends paid

- net cash from o.a. fails to take into acct that a co must invest in new PPE [Cap Exp] and dividends to maintain current levels of operating 

fcf = net cash provided by o.a. - capital exp - cash dividends

high fcf = solvency

generally Accepted Accounting Principles 

U.S.

Secuirty and Exchange Comission

- US financial markets account standard setting

Financial Acct Standards Board

U.S. setting body

result of SOA

- Public accting oversight board

relevance (if it would make a difference in the business decision/ materiality)

faithful representation (complete, neutral, free from error)

comparitability

consistency

verificable

timely

Monetary Unit Assumption

Economic Entity Assumption

Periodicity

Going Concern

- Historical Cost Principle

- Fair Value Principle (actively traded items such as investment securities fit here)

- Full Disclosure Principle

only uses assets that can be converted to cash quickly

quick assets/ current liabilities

debt vs investment balancing (think housing market)

why a high working capital is okay sometimes

sales - cost of goods sold

(basic profit)

all income taxes incurred during period

income before taxes (tax rate)

net income/ net sales

- amount of income earned for every dollar of sales

NOT GPM

gross margin/net sales

- measures the amount of gross margin earned for every dollar in sales 

current ratio = liquidity

debt to assets = solvency

eps = profitability