Lecture 3 / Chapter 4 Flashcards
Quarterly Financial Reporting
public companies report financial performance every 3 months - Q1, Q2 etc. If not reported in timely manner, stock can be delisted from stock exchange and more. Some use calendar year for fiscal year, others use year that fits seasonality patterns
SEC
securities and exchange commission (US)
FASB
Financial Accounting Standards Board - independent private organization, granted authority by SEC to set standards used in US financial reporting/accounting
GAAP
Generally Accepted Accounting Principles - rules set by FASB for the standards in US financial reporting and accounting - can be “non-GAAP” which means accounting aspects that are unique to business, but not mandatory to include. IFRS (International financial reporting standards)
IASB
International Accounting Standards Board responsible for developing International Financial Reporting Standards (IFRS)
EDGAR
online system of SEC, where companies must file GAAP compliant quarterly financial statements - freely available to review by public
Income Statement
Also called Profit & Loss Statement or P&L. Tracks what company made/lost/spent over a period of time, and whether performance is improving or declining when compared with previous data
Balance Sheet
tracks company’s assets, liabilities, net worth - summarizes what a company owns and owes at this point in time
Cash Flow Statement
literally follows the money, shows amount of cash generated or spent by company in course of business over a period of time
10-K or K Filing
fiscal fourth quarter filing - more detailed document of financial performance for quarter AND full fiscal year - financials for prior quarters/years as reference points. often includes letter from CEO to shareholders. Audited - filed in accordance with GAAP and certified by outside accounting firm.
10-Q or Q filing
reports from quarters 1-3, using financial performance for prior year as a source of comparison. unaudited
Revenue (Income Statement)
aka gross sales, top line - near top of income statement, could b broken into subcategories - total amount of money made from operations before expenses
Costs of Goods Sold
aka COGS or COS - could be line or series of lines directly under revenue. direct costs that go into producing the product/services to generate revenue
Gross Profit
revenue minus costs of goods sold
General and Administrative Expense
aka G&A - items like sales, marketing, PR, research and development, salaries of headquarters personnel, other expenses that don’t go directly into producing product or services
Operating Income
How much a company made after operating expenses (before taxes and debt deducted) aka operating profit or income from operations - profit or loss after COGS, G&A, depreciation & amortization, miscellaneous expense but BEFORE it pays taxes, interest expense or income tied to financing business (non operating expenses)
Net Income
How much a company made after expenses (including taxes) literal “bottom line” - net income or earnings - line near bottom of income statement - profit or loss for period after every expense has been taken into account
Operating Margin (Profit Margin)
measure of operational efficiency - shows how much money a company makes (has left over) on each dollar of sales it generates (before interest/taxes/dividends). Operating income (profit) divided by net revenue
Net Margin
takes into account operating AND non operating expenses such as interest and taxes - all possible expenses are included. Net income (profit) divided by net revenue
earnings per share (EPS
tells investors how much in the way of profit/loss shareholders would receive for each share if company was to distribute all earnings for the period. net income divided by total number of stock shares outstanding. usually found near bottom of income statement below net income line
Asset
on balance sheet. something company owns that has value with potential to generate revenue. could be sold or used by company to produce product or service
current assets
on balance sheet. assets company expects to convert to cash in a year or less
noncurrent assests
on balance sheet. longer term assets that won’t be converted into cash in a year or less (factories, stores, buildings, equipment, fixtures)
liabilities
a monetary obligation that an organization owes to others ie loans, mortgages, funds owed to suppliers (accounts payable), future income taxes payable, long-term debt
