Finance GPC Balance Sheet at Dec 31.2xx1 School of Management 2XXO 2xx1 Change Assets Cash mkt'ble secs 100.0 120.0 20.0 Receivables 50.0 60.0 10.0 Inventories 150.0 180.0 *Current assets 300.0 360.0 60.0 Market price Per Share Pp&e 400.0 490.0 90.0 Acc depreciation (100.0)(130.0)(30.0 2XXO 2XX1 *Net pp&e 300.0 360.0 60.0 20001872 **Total Assets 600.0 720.0 120.0 Liabilities& Equity Accounts payable 60.0 72.0 12.0 Short-term debt 90.0 184.6 94.6 *Current liabilities 150.0 256.6 106.6 Long-term debt 150.0 150.0 **Total liabilities 300.0 406.6 106.6 Paid-in capital 200.0 200.0 Retained earnings 100.0 113.4 13.4 Shareholders equ 300.0 313.4 13.4 uesTc Liab shareholder 600.0 720.0 120.0
6 Finance GPC Balance Sheet at Dec 31, 2xx1 School of Management 2xx0 2xx1 200.0 187.2 Market Price Per Share 2xx0 Change Assets Cash & mkt'ble secs 100.0 120.0 20.0 Receivables 50.0 60.0 10.0 Inventories 150.0 180.0 30.0 *Current assets 300.0 360.0 60.0 Pp&e 400.0 490.0 90.0 Acc depreciation (100.0) (130.0) (30.0) *Net pp&e 300.0 360.0 60.0 **Total Assets 600.0 720.0 120.0 Liabilities & Equity Accounts payable 60.0 72.0 12.0 Short-term debt 90.0 184.6 94.6 *Current liabilities 150.0 256.6 106.6 Long-term debt 150.0 150.0 - **Total liabilities 300.0 406.6 106.6 Paid-in capital 200.0 200.0 - Retained earnings 100.0 113.4 13.4 *Shareholders equ 300.0 313.4 13.4 Liab + Shareholder 600.0 720.0 120.0 2xx1
Finance School of Management The Income statement Summarizing the profitability of a company du ur ing a time period the difference of revenues and expenses also to be called the statement of the earnings or the statement ofprofit and loss uesTc
7 Finance School of Management The Income Statement ❖ Summarizing the profitability of a company during a time period. – the difference of revenues and expenses – also to be called the statement of the earnings or the statement of profit and loss
Finance School of Management The Income statement Major Divisions Revenue cost of goods sold Gross margin General selling and administrative expenses (GS&a) Operating income Interest expense Taxable income Corporate Taxes Net income uesTc
8 Finance School of Management ❖ Major Divisions – Revenue & cost of goods sold ✓ Gross margin – General selling and administrative expenses (GS&A) ✓ Operating income – Interest expense ✓ Taxable income – Corporate Taxes ✓ Net income The Income Statement
Finance School of management GPC Income Statement for Year ending 2XX 1 ales revenues 200.0 Cost of goods sold (110 Gross margin 90.0 Gen sell,& admin exp (30.0) Operating income 60.0 Interest expense (21.0) *taxable income 39.0 Income tax (156) Net income 23,4 Allocation to divs (10.0) chg retained earn 13.4 uesTc
9 Finance School of Management GPC Income Statement for Year Ending 2xx1 Sales revenues 200.0 Cost of goods sold (110.0) *Gross margin 90.0 Gen sell, & admin exp (30.0) *Operating income 60.0 Interest expense (21.0) *Taxable income 39.0 Income tax (15.6) *Net income 23.4 Allocation to divs (10.0) *Chg retained earn 13.4
Finance School of Management The Income Statement It is important to remember Retained earnings are not added to the cash balance of the firm but are added to shareholder s equity Accounts show historical values. not market values uesTc 10
10 Finance School of Management ❖ It is important to remember – Retained earnings are not added to the cash balance of the firm, but are added to shareholder’s equity. – Accounts show historical values, not market values. The Income Statement