Unit 7: Financial Reporting Flashcards
Balance Sheet
Financial position at specific point in time
Owners Equity
Assets - Liabilities
Current Liabilities
Under 12 months
-Accts & wages payable
-Notes
-Taxes
-Current servicing of long term debt
Long-term Liabilities
Greater than 12 months
-Bonds
-Mortgages
Types of owners equity (shareholder equity)
Capital Stock at par-matters for preferred shares
Capital in excess of par-matters for common
Retained earnings-profits not paid out in dividends
Capital Structure
A company’s combination of equity and debt
-will show up on balance sheet
Declaring dividend
retained earnings decrease
liabilities increase
net worth equal
Paying dividend
cash decreases
liabilities decrease
net worth decrease
Highly leveraged
over 50% debt to equity
(if utilities or other stable co, over 50% is not considered highly leveraged)
Eliminating debt at price above par
does not increase equity
Income statement
revenue and expenses for a period of time
-revenue, cost of goods sold, pre-tax income
Dividends/interest and taxes
dividends taxed twice (after tax funds, and taxed by recipient)
interest taxed once (before tax funds, but taxed by recipient)
fiscal year
period in which income statement represents, usually different than calendar year.
Audited statements
reviewed by independent auditor
Unaudited statements
are for business operating purposes
Audited statement footnotes
will include significant info on accounting methods and/or management processes.
Cash flow
three categories-
from operating activities, investing activities, and financing activities
CF from Operation
includes receipt of dividends and interest
for net income- add depreciation and amortization back
involves income statement
CF from Investing
indirect from ongoing business
CF from Financing
payment of dividends
involves balance sheet
Form 8K
news worthy reports, must be reported in 4 business days
Form 10K
Annual report on overall condition
Annual report to stockholders
Professionally prepared and most detailed publication on company
-but they are allowed to simply use Form 10K
Form 10Q
unaudited quarterly reports
Filing quarterly and annual reports mandated by
Securities Exchange Act 1934
Net change in cash position on Income Statement is
total cash flow from operations, investing and financing
Gross margin/profit
Revenue (or sales) - COGS
