Chapter 2 Financial Statements,Taxes,and Cash Flow 0
0 Chapter 2 Financial Statements, Taxes, and Cash Flow
Chapter Outline The Balance Sheet The Income Statement Taxes ■Cash Flow 1
1 Chapter Outline n The Balance Sheet n The Income Statement n Taxes n Cash Flow
Key Concepts and Skills Know the difference between book value and market value Know the difference between accounting income and cash flow Know the difference between average and marginal tax rates Know how to determine a firm's cash flow from its financial statements 2
2 Key Concepts and Skills n Know the difference between book value and market value n Know the difference between accounting income and cash flow n Know the difference between average and marginal tax rates n Know how to determine a firm’s cash flow from its financial statements
The Balance Sheet The balance sheet is a snapshot of the firm's assets and liabilities at a given point in time Assets are listed in order of decreasing liquidity a Ease of conversion to cash without significant loss of value Balance Sheet Identity Assets Liabilities Stockholders'Equity
3 The Balance Sheet n The balance sheet is a snapshot of the firm’s assets and liabilities at a given point in time n Assets are listed in order of decreasing liquidity § Ease of conversion to cash without significant loss of value n Balance Sheet Identity § Assets = Liabilities + Stockholders’ Equity
Figure 2.1 Total Value of Assets Total Value of Liabilities and Shareholders'Equity Net Working Current liabilities Capital Current assets Long-term debt Fixed assets 1.Tangible fixed assets 2. Intangible fixed Shareholders'equity assets 4
4 Figure 2.1