Escolar Documentos
Profissional Documentos
Cultura Documentos
FINANCIAL STATEMENTS
ACCOUNTS........................................................................2
Types of Accounts.......................................................................2
Account Classification.................................................................3
Asset Classification..................................................................... 8
Current Assets................................................................................................... 10
Long-Term Investments...................................................................................... 11
Fixed Assets....................................................................................................... 12
Intangible Assets............................................................................................... 13
Intangible Assets............................................................................................... 14
Shareholders Equity................................................................18
STATEMENT OF OPERATIONS...........................................22
Income Statement Use.............................................................23
Income versus Cash Flow.................................................................................. 24
Simple Format..........................................................................29
ACCOUNTS
Types of Accounts
Nominal (Temporary) accounts closed at the
end of the period (income statement accounts)
Revenues enhancement of assets or settlement of
liabilities due to delivering goods or rendering
services
Expenses use of assets or incurrence of liabilities
to deliver goods or provide services
Financial Statements
2
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Financial Statements
3
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ACCOUNTS
Account Classification
Account
s
Temporary
Permanent
(Income
Revenue
Operating
Revenue
Expenses
Operating
Expenses
(Balance
Assets
Current Assets
L-T
Investments
Fixed Assets
(PP&E)
Intangible
Equities
Liabilities
(Debtors
Owners
Equity
Current Liabilities
L-T Debt
Other L-T
Contribute
d Equity
Earned
Equity
Common Stock
Preferred Stock
Financial Statements
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Retained
point in time,
Two Parts:
Assets probable future benefits
Equities indicate how assets were acquired, two types:
Debtors equity, known as liabilities
Stockholders equity
Financial Statements
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Based on formula:
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Financial Statements
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What you
own
What you
owe
Financial Statements
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Financial Statements
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Balance Sheet
XXX Corporation
At Dec. 31, 20XX
Assets
Current
Assets
Investments
Fixed Assets
Intangible
Assets
Other Assets
Total Assets
Financial Statements
Liabilities
17,000
Current Liabilities
1,000
80,000
1,500
Deferred Taxes
Long-Term Liabilities
Total Liabilities
500
100,00
0
8,000
2,000
30,000
40,000
Owners Equity
Capital Stock
Retained Earnings
Total Equity
40,000
20,000
60,000
100,00
0
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Financial Statements
BORROWI
NG
(Liabilities
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REINVESTING
INCOME
(Retained
11
ASSETS
it!
It has
value!
Financial Statements
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Financial Statements
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Examples:
Cash coin, currency, and funds on deposit in the bank; most liquid
asset
Accounts Receivable claims against customers and others for
money, goods, or services (amounts owed to us)
Prepaid Expenses cash paid to others before receipt of goods or
performance of services
Inventories raw materials, work in process, or finished goods held
for further manufacturing or sale
Short-Term Investments securities held for less than a year,
usually for cash management purposes
Financial Statements
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Financial Statements
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Land
Buildings
Furniture
Equipment
Construction in Progress
Financial Statements
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TREATMENT OF INTANGIBLES
Internally
Created
Purchased
Limited
Life
Financial Statements
Expense as
incurred*
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Indefinite
Life
annually
Capitalize and evaluate
for impairment annually
(do not amortize)
Expense as
incurred*
Financial Statements
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Rank
Brand
Brand Value
Brand
Revenue
Company
Advertising
1
2
Apple
Google
$154.1 B
$82.5 B
$233.7 B
$68.5 B
$1.8 B
$3.2 B
Microsoft
$75.2 B
$87.6 B
$1.9 B
Cola
$58.5 B
$21.9 B
$4 B
$52.6 B
$17.4 B
$281 M
Toyota
$42.1 B
$165.1 B
$3.6 B
IBM
$41.4 B
$81.7 B
$1.3 B
Disney
$39.5 B
$28 B
$2.6 B
d's
$39.1 B
$82.7 B
$719 M
10
GE
$36.7 B
$92.3 B
Financial Statements
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Discussion Questions:
What is your favorite asset?
What are the most important assets for:
Manufacturers?
Service corporations?
Pharmaceuticals?
Financial Statements
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Financial Statements
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STATEMENT OF FINANCIAL
POSITION
Liability
Classifications
Current
current
Financial Statements
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For analysis
purposes, APIC is
treated the same
common stock
Financial Statements
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Financial Statements
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INTEL
CASE STUDY
CORPORATION
2014
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Trading assets
Accounts receivable, net of allowance for doubtful accounts of $38 ($38 in 2013)
Inventories
Deferred tax assets
Other current assets
2,561
2,430
9,063
4,427
4,273
1,958
3,018
2013
5,674
5,972
8,441
3,582
4,172
2,594
1,649
27,730
32,084
33,238
9,120
15,307
6,561
31,428
7,694
15,663
5,489
Total assets
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91,956
92,358
Current liabilities:
Short-term debt
Accounts payable
Accrued compensation and benefits
Accrued advertising
Deferred income
Other accrued liabilities
1,604
2,748
3,475
1,092
2,205
4,895
281
2,969
3,123
1,021
2,096
4,078
16,019
13,568
Long-term debt
Long-term deferred tax liabilities
Other long-term liabilities
Temporary equity
Stockholders equity:
Common stock,
Accumulated other comprehensive income (loss)
Retained earnings
12,107
3,775
3,278
912
13,165
4,397
2,972
21,781
666
33,418
21,536
1,243
35,477
55,865
58,256
Financial Statements
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91,956
92,358
STEM
Corp
What are the primary assets of Intel? Which of these assets most relate to
the corporate mission?
Maybe. The important asset of property, plant, and equipment increased. But,
total assets and intangibles decreased.
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Financial Statements
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CASE STUDY
Four companies:
Accenture
Chevron
Merck
WalMart
Consulting
Energy
Pharmaceu
tical
Retail
Financial Statements
4.5%
Myste Myste
ry
ry
Corp
Corp
3
4
27.4%
4.9% 15.9%
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Receivables
Inventories
Other Current Assets
Current Assets
Property, Plant, and
Equipment
Goodwill
Patent
Other Assets
Total Assets
Financial Statements
3.3%
22.1%
1.1%
31.1%
57.2%
21.2%
0.0%
17.9%
66.5%
3.9%
6.3%
2.4%
2.3%
15.9%
68.9%
6.7%
5.7%
5.3%
33.8%
13.3%
8.9%
12.8%
1.7%
0.0%
0.0%
0.0%
2.8%
16.8% 13.6%
100.0 100.0%
100.0
%
%
Walm Accent Chevr
art
ure
on
13.2%
20.8%
18.9%
100.0
%
Merc
k
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STATEMENT OF OPERATIONS
Income Statement
Financial Statements
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goal?
31
STATEMENT OF OPERATIONS
Income Statement Use
Income
Statement
Balance Sheet
Financial Statements
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Jan 1
32
Dec 31
STATEMENT OF OPERATIONS
Income versus Cash Flow
Financial Statements
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STATEMENT OF OPERATIONS
Ways Income Can Differ
From Operating Cash Flow
Financial Statements
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STATEMENT OF OPERATIONS
Financial Statements
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STATEMENT OF OPERATIONS
Alternative
Terms
International
Terms
Slang
Sales1
Turnover
Gross
Top Line
Cost
Provision2
Burden3
Eat
Earnings
Bottom Line
Cleared
Net
Profit
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Financial Statements
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STATEMENT OF OPERATIONS
Expense Categories
EXPENSE
EXAMPLE
Common Expenses
Cost of Goods Sold
Selling Expenses
General and
Administrative
Expenses
Interest Expense
Income Tax Expense
Direct Labor
Direct Material
Machinery Depreciation
Factory Overhead
Shipping to Customer
Advertising
Depreciation on Sales Vehicles
Manager Salary
Office Supplies
Accounting
Legal
Headquarters
Fees for Use of Debt
Profit-Based Government
Payments (Essentially 35% Flat
Rate in US)
Less Common
Expenses
Asset Impairment
Financial Statements
Obsolete Equipment
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Loss on Investment
Non-Controlling Interest
(AKA: Minority Interest)
Net of Tax
Expenses
Discontinued
Operations
Extraordinary Losses
Financial Statements
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STATEMENT OF OPERATIONS
Simple Format
XXX CORPORATION
INCOME STATEMENT
For the period ending December 31, 20XX
Sales
Cost of Goods Sold
Gross Profit
$100,000
- 60,000
40,000
- 25,000
Tax Expense
Net Income
- 5,000
$10,000
15,000
$5.00
outstanding)
Financial Statements
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INTEL
CASE STUDY
CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
2014
Net revenue
Cost of goods sold
Gross profit
55,870
20,261
35,609
2013
$
52,708
21,187
31,521
2012
$
53,341
20,190
33,151
11,537
8,136
589
20,262
10,611
8,088
531
19,230
10,148
8,057
308
18,513
Operating income
Gains (losses) on equity investments, net
Interest and other, net
Income before taxes
Tax expense
15,347
411
43
15,801
4,097
12,291
471
(151)
12,611
2,991
14,638
141
94
14,873
3,868
Net income
11,704
9,620
11,005
2.39
1.94
2.20
Financial Statements
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Financial Statements
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2.31
1.89
2.13
4,901
4,970
4,996
5,056
5,097
5,160
42
STATEMENT OF OPERATIONS
What is the difference between Gross Profit, Operating Income, and Net Income?
Gross Profit = Sales Cost of Goods Sold
Operating Income = Gross Profit Operating Expenses
Net Income = Operating Income Non-Operating Expenses - Tax
What is the biggest expense of Intel?
The cost of goods sold to customers (amounts utilized to manufacture
products).
Did revenue increase from 2013 to 2014?
Yes, (55,870 52,708) / 52,708 = 6.00% growth
Was Intel profitable over the past three years?
(in millions)
Sales
Net Income
Net Income as
a percent of
Sales
2014
$55,870
$11,704
2013
$52,708
$9,620
2012
$53,341
$11,005
20.95%
18.25%
20.63%
AKA:
Profit
Margin
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Financial Statements
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CASE STUDY
PFIZER, INC.
CONSOLIDATED STATEMENTS OF INCOME
Consolidated Statements of Income
Pfizer Inc. and Subsidiary Companies
Financial Statements
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9,586
14,355
6,678
4,599
1,182
(532)
15,716
4,306
11,410
45
9,821
15,171
7,482
5,109
1,810
4,022
11,242
2,221
9,021
Financial Statements
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9,168
32
9,135
1.44
6,346
1.04
10,662
22,072
69
22,003
5,577
14,598
28
14,570
3.23
1.96
6,813
0.96
7,442
0.88
46
Retained Earnings cumulative net income that has not been paid in
dividends
Beginning Retained
Earnings
+ Net Income (or Loss)
- Dividends__________
Ending Retained
Earnings
Pfizer, Inc.
Statement of Retained
Earnings
69,732
+
9,135
- 6,692
72,176
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Financial Statements
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LEARNING OBJECTIVES
At the end
of this note
section, you
should be
able to:
THEORY
Identify the difference between nominal and real accounts.
Define assets, liabilities, and owners equity
Understand the classifications of assets (5), liabilities (3), and
stockholders equity.
Know how balance sheets and income statements are used to make
decisions.
Know the formulas related to the balance sheet, income statement,
and statement of retained earnings.
APPLICATION
Financial Statements
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Financial Statements
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Financial Statements
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2014
130,844
2013
138,074
118,141
127,316
3,900
487
724
1,690
124,942
?
47
(397
5,552
1,777
3,775
3,710
226
387
758
1,720
134,117
?
325
59
(365
3,976
1,254
2,722
51
Financial Statements
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$
$
$
$
$
$
(64
3,711
81
3,630
3,694
(64
3,630
7.00
(0.12
?
526
1.05
)
$
$
)
$
$
)
$
$
6
2,728
8
2,720
2,714
6
2,720
4.98
0.01
?
542
0.85
52
Financial Statements
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Financial Statements
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2014
Current assets:
Cash and temporary cash investments
Receivables, net
Inventories
Income taxes receivable
Deferred income taxes
Prepaid expenses and other
3,689
5,879
6,623
97
162
164
2013
$
4,292
8,751
5,758
72
266
138
16,614
19,277
35,933
(9,198)
33,933
(8,226)
26,735
25,707
2,201
2,276
Total assets
Financial Statements
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45,550
606
6,760
596
55
47,260
303
9,931
522
1,209
809
9,980
1,345
773
13,123
5,780
6,261
6,607
6,601
1,939
1,329
7
7,116
(8,125)
22,046
(367)
7
7,187
(7,054)
18,970
350
20,677
567
19,460
486
21,244
19,946
Financial Statements
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45,550
56
47,260
1.
More than half of Valeros assets are property, plan, and equipment. They are a
capital intensive company. They also maintain a significant inventory.
2.
Valeros debt to equity ratio is 1.14 [(45,550 21,244) /21,244]. They finance
assets with slightly more debt.
3.
What are the sources of debt for Valero? Who were the likely lenders?
While property, plant, and equipment (their most important asset) has grown
slightly, total assets have decreased over the last year. Valero is likely slowing
in growth.
True or False
T F 5. Most of Valeros debt is short term. (LT liabilities slightly exceed
current liabilities)
Financial Statements
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Financial Statements
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2015
2014
$9,135
6,778
45,141
2,224
63,278
$7,281
6,677
44,858
2,369
61,185
183,634
(65,979)
116,655
178,678
(60,771)
117,907
18,102
5,671
$203,706
19,510
6,149
$204,751
$1,592
$7,670
58
Accounts payable
Accrued liabilities
Long-term debt due within one year
Other current assets
Total current liabilities
38,410
19,152
4,810
1,308
65,272
37,415
18,793
4,103
1,364
69,345
Long-term debt
Long-term obligations under capital leases
Deferred income taxes and other
Redeemable noncontrolling interest
41,086
2,606
8,805
41,771
2,788
8,017
1,491
2,785
85,777
(7,168)
81,394
4,543
85,937
$203,706
2,685
76,566
(2,996)
76,255
5,084
81,339
$204,751
Equity:
Common stock
Retained earnings
Accumulated other comprehensive income (loss)
Total Walmart shareholders' equity
Nonredeemable noncontrolling interest
Total equity
Total liabilities, redeemable noncontrolling interest, and equity
Financial Statements
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1.
Maybe, total assets and PP&E decreased, but inventory increased over the last
year. WalMart is in the business of selling inventory and is in process of
converting from brick and mortar to an electronic platform.
4.
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NET SALES
Cost of Sales
GROSS PROFIT
Operating Expenses:
Selling, General and Administrative
Depreciation and Amortization
Total Operating Expenses
OPERATING INCOME
2014
$78,812
51,422
27,390
2013
$74,754
48,912
25,842
2012
$70,395
46,133
24,262
16,597
1,627
18,224
16,508
1,568
18,076
16,028
1,573
17,601
9,166
7,766
6,661
Financial Statements
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Financial Statements
(12)
711
699
8,467
(20)
632
(67)
545
7,221
(13)
606
593
6,068
3,082
$5,385
2,686
$4,535
2,185
$3,883
1,425
$3.78
1,499
$3.03
1,562
$2.49
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1. What is the difference between Gross Profit, Operating Income, and Net
Income?
Gross Profit = Sales Cost of Goods Sold
Operating Income = Gross Profit Operating Expenses
Net Income = Operating Income Non-Operating Expenses - Tax
2. What is the biggest expense of Home Depot?
The cost of goods sold to customers (amounts paid to suppliers).
3. Did revenue increase from 2013 to 2014?
Yes, (78,812 74,754) / 74,754 = 5.43% growth
4. Was Home Depot profitable over the past three years?
(in millions)
Sales
Net Income
Net Income as
a percent of
Sales (Profit
Margin)
2014
$78,812
$5,385
2013
$74,754
$4,535
2012
$70,395
$3,883
6.83%
6.07%
5.52%
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20,038
+ 5,385
- 2,243
23,180
Financial Statements
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