Stockholders' Equity, CFs, Ratio Analysis Flashcards
When translating foreign currency into the reporting currency (translation method), what rate is used?
All assets & liabilities are translated using the current (year-end) exchange rate while common stock & APIC (capital accounts) are translated at historic rates.
How do you calculate book value per share?
Divide common stockholders’ equity by common shares outstanding (don’t include shares held in treasury)
Are contingent shares included in EPS calc?
What must be treated as if happened at beginning of year for purposes of eps?
yes, if as of date conditions for issuance are met. Stock options are not included in calculation. Convertible securities are ignored.
Declaration of stock dividend, 2 for 1 stock splits (prior years also need to be adjusted if showing comparatives).
How do you calculated diluted EPS?
Adjusted net income/adjusted Shares Outstanding*
*adj net income includes adding interest expense net of the tax deduction, e.g. int expense of 80 x 30% tax rate (24). Adj shares includes # of shares if preferred and convertible bonds are converted to common. Preferred dividends not subtracted if assuming pref shares converted to common at beginning of period.
Per U.S. GAAP, EPS data should be reported on the income statement for both …
..Both extraordinary income and income before extraordinary items
What are required disclosures on the statement of cash flows prepared under the direct method per US GAAP?
What supplemental info is required under the direct method?
What supplemental info is required under the indirect method?
- Major classes of gross cash receipts and payments
- Amount of income taxes paid
- Reconciliation of net income to net cash flow from ops
NOT rec of ending R/E to net CF from ops
Conversion of debt to equity
Cash paid for interest and income taxes
What are some examples of items to include in investing activities on the statement of cash flows?
Proceeds from both available for sale and held to maturity investment purchases/sales/maturities are cash inflows
What are some examples of items to include in investing activities on the statement of cash flows?
Generally - anything related to sale/acquisition of non-current assets. E.g.:
- Loans to other entities (outflow)
- purchasing/disposing NON CURRENT trading secs and avail for sale & held to maturity securities
- Purchasing/disposing PP&E
- Acquiring another entity under acquisition method using cash
How do you compute cash paid to suppliers?
Determine how much inventory was purchased and the change in accounts payable.
Purchases = COGS + change in inventory
Cash paid to suppliers = Purchases - change in AP*
*if decrease, indicates more was paid to suppliers on top of purchases
How do you compute cash paid to suppliers?
Determine how much inventory was purchased and the change in accounts payable.
Purchases = COGS + change in inventory
Cash paid to suppliers = Purchases - change in AP*
*if decrease, indicates more was paid to suppliers on top of purchases
What are some examples of items to include in financing activities on the statement of cash flows?
Financing activities include flows from non-current creditor oriented liabilities and equity (owner oriented). E.g. of Equity oriented:
- Getting resources from owners (issuing stock - inflow)
- Providing owners with return on investment, like paying dividends/repurchasing stock (outflow)
E.g. of liability oriented:
- Getting resources from creditors like bonds, notes & other borrowings (inflow)
- Payments on principal of amount borrowed - outflow (interest is operating activities)
What are some examples of items to include in operating activities on the statement of cash flows?
Indirect: Adjust net income by .. \+ Depreciation & amortization \+ Losses - Gains - Equity earnings affiliate \+/- Change in operating assets \+/- Change in operating liabilities Direct: 1.) Cash received from customers 2.) Interest received 3.) Dividends received 4.) Other op receipts (e.g. insurance proceeds) 5.) Cash from securities sale (classed as trading) 6.) Cash paid to suppliers/employees 7.) Interest paid (outflow) 8.) Income taxes paid (outflow) 9.) Cash paid for trading secs if current assets (outflow) 10.) Other op payments (e.g. rent or utilities)
