Chapter Outline The Balance Sheet The Income Statement Taxes Cash Flow 5
5 Chapter Outline n The Balance Sheet n The Income Statement n Taxes n Cash Flow
Taxes The one thing about taxes we can rely on is that they will always be changing Marginal vs.average tax rates Marginal-the percentage paid on the next dollar earned Average-the tax bill taxable income Other taxes 6
6 Taxes n The one thing about taxes we can rely on is that they will always be changing n Marginal vs. average tax rates q Marginal – the percentage paid on the next dollar earned q Average – the tax bill / taxable income n Other taxes
Corporate Tax Rates Taxable Income Tax Rate $ 0- 50,000 15% 50,001- 75,000 25 75,001- 100,000 34 100,001- 335,000 39 335,001-10,000,000 34 10,000,001-15,000,000 35 15,000,001-18,333,333 38 18,333,334+ 34 7
7 Corporate Tax Rates Taxable Income Tax Rate $ 0- 50,000 15% 50,001- 75,000 25 75,001- 100,000 34 100,001- 335,000 39 335,001- 10,000,000 34 10,000,001- 15,000,000 35 15,000,001- 18,333,333 38 18,333,334+ 34
Cash Flow From Assets Cash Flow From Assets Operating Cash Flow Net Capital Spending Changes in NWC OCF (I/S)=EBIT depreciation-taxes NCS B/S and I/S)=ending net fixed assets 一 beginning net fixed assets depreciation Changes in NWC (B/S)=ending NWC- beginning NWC 8
8 Cash Flow From Assets n Cash Flow From Assets = Operating Cash Flow – Net Capital Spending – Changes in NWC q OCF (I/S) = EBIT + depreciation – taxes q NCS ( B/S and I/S) = ending net fixed assets – beginning net fixed assets + depreciation q Changes in NWC (B/S) = ending NWC – beginning NWC
Cash Flow to Investors CF to Creditors (B/S and I/S)=interest paid net new borrowing CF to Stockholders(B/S and I/S)= dividends paid -net new equity raised 9
9 Cash Flow to Investors n CF to Creditors (B/S and I/S) = interest paid – net new borrowing n CF to Stockholders (B/S and I/S) = dividends paid – net new equity raised