F8 - EPS, Cash Flows and NFP Accounting Flashcards
WA # of Share O/S
Shares O/S BOY
+Shares Sold during the period
-Shares reacquired during period
+Stock Dividends/Stock Splits
-Reverse Stock Splits
=WA Shares O/S
WA Shares:
Multiply by O/S part of year
EPS: Dilutive Shares
Dilutive Contingent Shares can be included in the calculation for EPS
When computing WA # of shares, what mid-year event has to be treated as if it happened at the BOY?
Declaration and distribution of stock dividend.
Getting to Basic EPS: Calculation
Net Income
- Cumulative Preferred Stock
Dividend
= Income available to CS O/S
/ Average Common Shares o/s
=EPS
When calculating WA Basic EPS, how are convertible securities treated?
They are ignored.
How are shares issued treated when calculating WA EPS? Calculation included
Included in calculation
NOTE: don’t forget to multiply by months o/s
Multiply by:
- Months o/s (until next equity transaction)
- stock split
NOTE:
- Don’t forget to double amount outstanding at date of stock split but don’t multiply by 2 again.
- Total amount of month’s outstanding should be 12 (total o/s / 12 = WA)
Stock splits and Stock Dividends require what in regards to shares outstanding?
Restatement before the dividend/stock split. (As if it happen at the beginning of the year). Even if it happened in the next year, the prior year would nee to be restated
Interest Expense on convertible debt should be treated how in relation to net income and diluted earnings?
Added back to NI for diluted earnings
Ignored for Basic Earnings
NOTE: EPS
Typically assume WA EPS is used
Diluted EPS: Calculation
Adjusted NI:
NI \+Interest Expense -Tax Deduction eliminated (interest expense * TR) \+Discount Amortization =Adjusted NI
Adjusted shares o/s: CS Shares o/s \+Conversion of preferred \+Conversion of bonds =Adjust Shares o/s
(Adjusted NI / Adjusted Shares o/s)
=Diluted EPS
Computing Diluted EPS: With o/s shares during the year
(# of shares * months outstanding)
=WA shares o/s
Income Available for CS
/ (WA shares o/s)
=Basic/Diluted EPS
Diluted vs Basic EPS: Note
Diluted will always produce a lower EPS than Basic
Dilutive Effect of Options: Calculation
# of shares (exercisable
options)
- (#of shares x exercise
price) / Average MP
=Additional shares outstanding
Dividend Adjustment and WA CS o/s: Calculation
Total shares * Stock split
(done for each period
separately based on #’s
before split)
*period o/s
*(Adjustment for dividend)
(1 + % dividend)
=WA
Cumulative Preferred Stock and EPS: Calculation
IATCSH (Income available to common shareholders) is computed by deducting dividends declared in the period on “non-cumulative” preferred stock and “cumulative” preferred stock. Regardless of whether they have been paid and declared (respectively).
Cash Flows: What is not shown on the SCF when using the direct or indirect method?
Recon of Ending RE to Net Cash Flow from operations (instead this is a rec of NI to Net Cash Flow from operations)
Investment Activities Include:
Acquisitions and Sales of long-term assets or investment assets (buildings, equipment, bonds etc.)
Financing Activities Include:
Obtaining resources from owners and providing them with a return (dividends paid, borrowing money, repaying amounts borrowed)
Operating Cash Flows:
NI \+Increases in Liabilities -Increases in Assets \+Decreases in Assets -Decreases in Liabilities \+Depreciation Expense \+Losses on sale of equipment -Gains on sale of equipment \+Goodwill Impairment -Decrease in Taxes Payable
Financing Activities: Calculating Cash Used
\+Retirement of Bonds \+Payment of Dividends -Proceeds from Sale of TS \+Proceeds from Issuance of debt -Payments on LT Debt
Cash Paid to Suppliers
COGS:
+Increases in Inventory
-Decreases in Inventory
-Increases in AP
+Decreases in AP
Cash Flows Indirect Method: Supplemental Disclosures
Cash Paid for Interest
Cash Paid for Income Taxes
Cash Payments made to reduce debt are included in which type of cash flow activity?
Financing
Cash Flows: Amortization of Bond Discount
Operating Activity, added back to NI. (was originally deducted)
Cash Flows: Net Cash from Investing Activities
Include cash flows from both AFS and HTM investments
Cash Flows: Dividends
Dividends are included in Operating Activities
Cash Flows: IFRS and Interest Received/Paid
Received: reported on either “operating or investing statement”
Paid: reported on either “operating or financing statement”
Cash Flows: IFRS and Dividends Paid/Received
Paid: operating or financing
Cash Flows: Non-Cash Investing/Financing Activities
Reported as supplemental information. Report the non-cash portion. FV of stock given up.
Examples:
- Issuing stock for assets
- Converting bonds to stock
- Issuing Bonds for assets
NFP: “Program Services” would Include? (major parts)
Labor Negotiations
NFP: “Supporting Services” would include?
Fundraising, Membership development, Administrative and General Expenses
NFP: Restricted vs Unrestricted
Only donor imposed restrictions are recognized on the financial statements. Internally imposed restrictions are still shown as “unrestricted”
NFP: Required Financial Statements
- Statement of Financial Position
- Statement of Activities
- Statement of Cash Flows
NFP: Reporting Expenses
- Should be reported in the functional areas (program classification, supporting activities, fund raising) on the statement of activities or notes to the F/S.
- Are reported as decreases to “unrestricted net assets”
- Grants and depreciation are reported as expenses
NFP: What are the 3 Functional Classifications for expenses?
- Program Services
- Management
- General Costs
NFP: FASB ASC 958 Says NFP Financial Statements focus on what?
Basic Information for the organization as a whole
What happens when a temporary restriction is satisfied?
Reclassification:
Decrease in “temporary restricted net assets” and increase in “unrestricted net assets”
NFP: Statement of Activities Purpose
To report the change in net assets for the period.
NFP: Release of Restricted Assets
When expenses have been incurred inline with the restrictions, those amounts are released from restriction.
NFP: Investing Activities
Include:
- Sale of long lived assets
- Insurance proceeds from loss of long lived assets
NFP: Statement of voluntary health and welfare is required for who?
Health and Welfare organizations
NFP: Unrestricted Revenues include?
- Per Capita Dues
- Initiation Fees
- Sales of organizational supplies
NFP: Contribution Revenue
When tickets/other tangible item is given in exchange for a contribution, the revenue recognized is the amount above the FMV of the tickets /items.
NFP: Cash contributions and unconditional pledges are recognized as revenue when?
In the year they are received.
NFP: Donated Services are recognized at FV when?
- Create or enhance non-financial assets
- Require specialized skills
NFP: Net Revenue
Gross Revenues -Charity care -Contractual adjustments (difference between billing rates and fees negotiated)
NFP: Good Faith Deposits
The use of a gift that is conditional upon raising matching funds.
Recorded as:
-Refundable Advance
NFP: Unconditional Pledges to be collected over more than a one year period, should be reported how?
Pledges Receivable @PV
NFP: Donated Property is recognized how?
FV and recognized as support
NFP: Gains/Losses
Should be reported on Statement of Activities unless stipulated differently by the donor/law
