Chapter 3 CASH FLOWS AND FINANCIAL ANALYSIS FOCUS The first half of the chapter is focused on cash flow in business. The emphasis is on understanding where cash comes from, what it's used for, and how to get that information out of financial statements. The second half of the chapter deals with financial analysis. A series of ratios are presented along with discussions of the kinds of problems they're designed to illuminate. Practical issues like the interpretation of a long collection
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Chapter 3 CASH FLOWS AND FINANCIAL ANALYSIS FOCUS The first half of the chapter is focused on cash flow in business. The emphasis is on understanding where cash comes from, what it's used for, and how to get that information out of financial statements. The second half of the chapter deals with financial analysis. A series of ratios are presented along with discussions of the kinds of problems they're designed to illuminate. Practical issues like the interpretation of a long collection
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Capital CF to investors (CF from assets=FCF) = -CF from financing activities + interest Cash flow to creditors = interest + retirement of debt – new debt issues = = interest – Δ LT debt – Δ ST debt – ΔCurrent maturities of LTD Cash flow to shareholders = dividends + repurchase of stock – new equity issues = = -ΔStockholders’ equity + Net Income Current Ratio = CA/ CL Quick Ratio => you have to remember! Debt ratio = TL/TA D/E = TD/TE Equity Multiplier = TA/TE Times interest earned = EBIT / Interest
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------------------------------------------------- Table of Contents CHAPTER: ONE INTRODUCTION OF THE PROJECT………………………….1-4 CHAPTER: TWO INTRODUCTION OF THE ORGANIZATION……..…………5-9 CHAPTER: THREE CAPITAL STRUCTURE ANALYSIS………………………….10-15 Fixed Assets……………………………………………………….10-12 Inventories…………………………………………………………12-15 CHAPTER: FOUR ANALYSIS OF ASSETS…………………………………………..16-18 CHAPTER: FIVE CASH FLOW ANALYSIS………..………………………………19-26 CHAPTER: SIX FINANCIAL RATIO
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the cash receipts, cash payments, and net change in cash resulting from operating, investing, and financing activities during a period. The information in a statement of cash flows should help investors, creditors, and others assess” (Weygandt, J. J., Kimmel, P. D., & Keiso, D. E. 2010). There are three sections of cash flow and they are Operating Activities, Investment Activities and Financing Activities. Operating activities include the cash effects of transactions that create revenues and
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FINANCIAL PLANNING Hoạch Định Tài Chính I. Corporate Financial Planning I. Hoạch định tài chính doanh nghiệp 1.1 Actual 1.1 Dữ kiện thực tế Problem. Construct actual (historical) financial statements for Cutting Edge B2B Inc. in preparation for forecasting their financial statements. Vấn đề: Cấu trúc dữ kiện thực tế (quá khứ) báo cáo tài chính cho công ty Cutting Edge B2B để chuẩn bị cho công tác dự báo Báo Cáo Tài Chính Solution Strategy. Enter actual values in the yellow input sections
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Capital Structure Leverage refers to the effects that fixed costs have on the returns that shareholders earn. “Fixed costs” refer to costs that do not rise and fall with changes in a firm’s sales. Capital structure is the mix of long-term debt and equity maintained by the firm. Breakeven analysis is used to indicate the level of operations necessary to cover all costs and to evaluate the profitability associated with various levels of sales; also called cost-volume-profit analysis. Operating
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through the years which resulted in Merck’s been higher at times. Higher operating margin meant that the firm had more revenue left after paying for expenses. Higher operating margin put the firm in a better position of repaying debt. If the company can afford to pay its debts then they are more likely to get credit to finance investing needs. Another ratio that showed how well the company could pay for its short term obligation is the current ratio. The current ratio measures liquidity and Merck
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recession. The firm’s required debt payment at the end of the year is $150 million. The market value of Good Time’s outstanding debt is $108.93 million. Assume a one-period model, risk neutrality, and an annual discount rate of 12% for both the firm’s debt and equity. Good Time pays no taxes. a. What is the value of the firm’s equity? b. What is the promised return on Good Time’s debt? c. What is the value of the firm? d. How much would Good Time’s debt be worth if there were no
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Principles of Accounting II Final Paper Scott Khy ACC206: Principles of Accounting II (BAH1603A) Instructor: Dawayne Rowell February 15th, 2016 RISK PROFILE OF THE COMPANY Review of ABC Company and the directions it is targeting. The strategy of the company is to lift the expected sales in an aggressive fashion, with the expected end target being to triple the current levels. The plan is to push sales into the targeted range of $3 million within 3 years versus the current amount which
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