Public Company Reporting Topics Flashcards
Financial Ratios
How is bond and debenture interest savings computed for interim reporting of diluted EPS?
Interest is computed for the partial year not for the full year
How is the cash method of accounting converted to the accrual method of accounting?
The change in the corresponding balance sheet account is added or subtracted from the revenue or expense
The easiest way to do this is with journal entries:
1. record the cash paid (same as cash method of accounting)
2. Record the change in the corresponding balance sheet account
3. Plus the accrual basis revenue or expense to determine the accrual revenue or expense
How is accrual to cash basis of accounting computed?
Accrual net income
+/- assets accounts (opposite of the YoY change)
+/- liability accounts (same as the YoY change)
= Cash net income
How is basic EPS calculated?
(Net Income - Preferred Dividends) / Weighted Average Shares Outstanding
How do stock splits and stock dividends effect the WACSO computation?
Stock dividends and stock splits are applied as if they occurred at the beginning of the year
How do convertible bonds impact EPS?
Covertible bonds can potentially dilute EPS. Interest savings is added to net income (net of tax) and converted common shares are added to WACSO
What are the three types of SEC filiers and when must they file Form 10-K and Form 10-Q?
10-K 10-Q
Large Acclerated ($700M +) 60 40
Accelerated ($75M - $700M) 75 40
Non-Accelerated (less than $75M) 90 45
What is Form 10-K?
Form 10-K is filed annually and provides a comprehensive report of a company’s financial position including audited financial statements
What is Form 10-Q?
Form 10-Q is filed quarterly (3x per year) and contains un-audited financial statements, discussion from management, and a list of material events that have occured within the company during the quarter
What is the primary goal of interim financial statements?
Timleness over faithful representation
What is form 8-K?
Form 8-K is filed with the SEC to report material current events allowing investors to obtain information more timely
What is form S-K?
Form S-K provides instruction for filing non-financial statement forms
How are convertible bonds issued at a premium or discount impact EPS?
Convertible bonds may dilute EPS. The interest expense (net of tax) is added to net income and the converted shares are added to WACSO. Interest expense is the difference between the interest payment (face x interest) and amortization.
Which governing body has the authority to establish standards?
The SEC has the authority to establish standards, however standard setting is deferred to FASB
