Snapshot of firms accounting value at a specific point in time
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How are assets and liabilities ordered in a balance sheet
Assets ordered by liquidity (liquid at top). Liabilities ordered by when they come due (current at top)
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What are the concerns when analysing a balance sheet
Accounting liquidity (more liquid=easy to meet ST liabilities). Debt vs Equity (Creditors get first claim on CF). Value vs Cost (GAAP assets historical cost, IFRS assets at market value)
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What is an income statement
Measures financial performance over a specific time period
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How is an income statement laid out
Operations section(Revenue-cost of operating), then non operating section(financial costs like interest expense), Taxes levied then bottom line is net income
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What is EBIT
Just the operations section of the income statement
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What should be kept in mind when analysing financial statement
GAAP (income and expenses reported when incurred, not when CF). Non Cash items (net income not equal CF). Time and Cash (LR costs variable). Costs and Purpose (Period vs Product costs)
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How to calc average Tax Rate
Tax Bill/Taxable Income
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What does an increase in NWC mean
Investment in firm (Growth)
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CF(assets)=
CF(creditors)+CF(shareholders)
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Other cards in this set
Card 2
Front
How are assets and liabilities ordered in a balance sheet
Back
Assets ordered by liquidity (liquid at top). Liabilities ordered by when they come due (current at top)
Card 3
Front
What are the concerns when analysing a balance sheet
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