© 2006 Pearson Education Canada Inc.Chapter Chapter 13 Analyzing and Using Financial Information

© 2006 Pearson Education Canada Inc.Chapter What Is Accounting? Communication Measuring Interpreting FinancialAccountingFinancialAccountingManagementAccountingManagementAccounting Decision Making

© 2006 Pearson Education Canada Inc.Chapter What Accountants Do TaxAccountingTaxAccounting BookkeepingBookkeeping FinancialAnalysisFinancialAnalysis CostAccountingCostAccounting

© 2006 Pearson Education Canada Inc.Chapter Ten Most Important Accounting Skills Analytical Problem solving Interpersonal Listening Communication Leadership Decision making Time management Teamwork Computer

© 2006 Pearson Education Canada Inc.Chapter Types of Accountants Private or (Corporate) accountants work for a businesses other than a public accounting firm Public accountants, are independent of the clients they serve Most are employed by accounting firms Members of the firm are generally CA’s PrivatePublic

© 2006 Pearson Education Canada Inc.Chapter Types of Accountants Chartered Accountant Certified Management Accountant Certified General Accountant

© 2006 Pearson Education Canada Inc.Chapter Accounting Rules Generally Accepted Accounting Principles (GAAP) Financial Accounting Standards Board (FASB) Canadian Institute of Chartered Accountants (CICA)

© 2006 Pearson Education Canada Inc.Chapter Fundamental Accounting Concepts The Accounting Equation Double-Entry Bookkeeping The Matching Principle

© 2006 Pearson Education Canada Inc.Chapter The Accounting Equation Owner’s Equity: Accounting Equation: Assets = Liabilities + Owner’s Equity Assets – Liabilities = Owner’s Equity

© 2006 Pearson Education Canada Inc.Chapter Basic Accounting Concepts Double-EntryBookkeepingDouble-EntryBookkeepingMatchingPrincipleMatchingPrinciple CashBasisCashBasisAccrualBasisAccrualBasisCashPurchaseCashPurchaseCreditPurchaseCreditPurchase

© 2006 Pearson Education Canada Inc.Chapter How Are Financial Statements Used?

© 2006 Pearson Education Canada Inc.Chapter Understanding Financial Statements Balance Sheet Income Statement Cash-Flow Statement

© 2006 Pearson Education Canada Inc.Chapter The Balance Sheet Assets Liabilities and Shareholder’s Equity Current AssetsFixed Assets Current Liabilities Long-Term Liabilities Shareholder’s Equity

© 2006 Pearson Education Canada Inc.Chapter The Income Statement OperatingExpensesOperatingExpenses RevenuesRevenues Net Income After Taxes Net Income After Taxes Cost of Goods Sold Cost of Goods Sold

© 2006 Pearson Education Canada Inc.Chapter The Cash-Flow Statement Operations Investments Financing

© 2006 Pearson Education Canada Inc.Chapter Analyzing Financial Statements Trend Analysis Ratio Analysis Consider More Than One Ratio Uncover Business Shifts Consider Extraordinary Circumstances Check Specific Data

© 2006 Pearson Education Canada Inc.Chapter Types of Financial Ratios ActivityLeverage ProfitabilityLiquidity

© 2006 Pearson Education Canada Inc.Chapter Profitability Ratios Return on Sales = Net Income Net Sales Return on Equity = Net Income Total Owner’s Equity Earnings per Share = Net Income Average Shares Outstanding

© 2006 Pearson Education Canada Inc.Chapter Liquidity Ratios Working Capital = Current Assets – Current Liabilities Current Ratio = Current Assets Current Liabilities Quick Ratio = Current Assets – Liabilities Current Liabilities

© 2006 Pearson Education Canada Inc.Chapter Activity Ratios Inventory Turnover = Cost of Goods Sold Average Inventory Receivables Turnover = Sales Average Accounts Receivable

© 2006 Pearson Education Canada Inc.Chapter Leverage Ratios Debt to Equity = Total Liabilities Total Equity Debt to Total Assets = Total Liabilities Total Assets

© 2006 Pearson Education Canada Inc.Chapter Financial Management Developing and Implementing a Financial Plan Monitoring Cash Flow Developing a Budget Amount of funds Sources of funds Uses of funds Cash Inventory Receivables and payables Financial control Capital investments Capital budgeting