Forms of Business Organization The Sole Proprietorship The Partnership –General Partnership –Limited Partnership The Corporation Advantages and Disadvantages.

Slides:

Advertisements

Similar presentations

Chapter 3 Working with Financial Statements

Advertisements

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved CHAPTER 2 Financial Statements and Cash Flow.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved CHAPTER 1 Introduction to Corporate Finance.

McGraw-Hill/Irwin Corporate Finance, 7/e. McGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved. 1-1 CHAPTER.

1 Finance Basics Rania A. Azmi University of Alexandria, Department of Business Administration.

Chapter 2 – MBA5041 Accounting Statements The Balance Sheet The Income Statement Net Working Capital Financial Cash Flow The Statement of Cash Flows Financial.

Strategic Management Financial Ratios

1-1 Course Overview Finance: what is it? Corporations Investors Financial Markets: Banks, Stock Exchanges Corporate Finance Money and capital marketsInvestments.

Analyzing Financial Statements 9/01/03

1 16. Understanding Accounting & Financial Statements.

Introduction to Corporate Finance Chapter 1 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

1 Copyright © 2008 Thomson South-Western, a part of the Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under.

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Thirteen Financial Statement Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

0 Accounting Statements and Cash Flow. 1 Chapter Outline 2.1 The Balance Sheet 2.2 The Income Statement 2.3 Net Working Capital 2.4 Financial Cash Flow.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA CHAPTER.

2-0 McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Statements and Cash Flow Chapter 2.

McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 2-0 Corporate Finance Ross  Westerfield  Jaffe Sixth Edition.

2-0 Corporate Finance Ross  Westerfield  Jaffe Seventh Edition 2 Chapter Two Accounting Statements and Cash Flow.

Financial Accounting Dave Ludwick, P.Eng, MBA, PMP, PhD Chapter 20 Ratios Analysis.

Financial Statements and Cash Flows

Investments: Analysis and Behavior Chapter 10- Financial Statement Analysis ©2008 McGraw-Hill/Irwin.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

X100©2008 KEAW L15 X100 Introduction to Business Finance Professor Kenneth EA Wendeln Financial Analysis & Ratios Financial Analysis & Ratios.

Financial Statements Ratio Analysis

McGraw-Hill/IrwinCopyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Corporate Finance Chapter 1.

CAIIB-Financial Management-MOD-B The Analysis of Financial Statements u The Use Of Financial Ratios u Analyzing Liquidity u Analyzing Activity u Analyzing.

Key Financial Ratios 1. Profitability Ratios Key ratios – Return on shareholders’ equity (ROE) – Return on assets (ROA) – Return on sales (ROS) – Gross.

Hong Kong Polytechnic University AF3303 Business Finance Lecture 1 Introduction to Corporate Finance Instructor: Dr. Jacqueline Wang.

Using Financial Statement Information Presentations for Chapter 5 by Glenn Owen.

Chapter 18-1 LO 5 Identify and compute ratios used in analyzing a firm’s liquidity, profitability, and solvency. Ratio Analysis Illustration.

Ratio Analysis Liquid Asset An asset that can be easily converted into cash without significant loss of its original value Liquidity Ratios Ratios that.

Financial Statements and Cash Flow CHAPTER 2.1. Key Concepts and Skills Understand the information provided by financial statements Differentiate between.

0 Chapter 2 Financial Statements, Taxes, and Cash Flow.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Analyzing Financial Statements Chapter 14.

Chapter 14.  To make informed decisions about a company  Generally based on comparative financial data ◦ From one year to the next ◦ With a competing.

Financial Statement Analysis. Two Primary Statements Balance Sheet –Snapshot –BV vs MV Income Statement –Period of time.

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. 1-0 Corporate Finance Ross  Westerfield  Jaffe Seventh Edition.

The Analysis of Financial Statements

Analysis of Financial Statements. Learning Objectives  Understand the purpose of financial statement analysis.  Perform a vertical analysis of a company’s.

Analyzing Financial Statements Chapter 14 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Analyzing Financial Statements Chapter 23.

2-0 McGraw-Hill Ryerson © 2003 McGraw–Hill Ryerson Limited Corporate Finance Ross  Westerfield  Jaffe Sixth Edition 2 Chapter Two Accounting Statements.

Analyzing Financial Statements

Financial Statement Analysis

Ratio Analysis Ratio analysis is a particular type of financial statement analysis where the relationship between two or more items from the financial.

V. STOCKS. L. RATIO ANALYSIS 1.Ratios That Measure Liquidity (the firm’s ability to convert assets into cash) a.Current Ratio = Current Assets Current.

1 Chapter 03 Analyzing Financial Statements McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Analyzing Financial Statements

McGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved. 2-0 CHAPTER 2 Accounting Statements and Cash Flow.

CHAPTER 11 FINANCIAL STATEMENT ANALYSIS McGraw-Hill/Irwin©The McGraw-Hill Companies, Inc., 2002.

1-1 CHAPTER 1 Introduction to Financial Management What is corporate finance? Forms of Businesses Goals of the Corporation Conflicts Between Managers and.

McGraw-Hill Ryerson © 2003 McGraw–Hill Ryerson Limited 1-0 Corporate Finance Ross  Westerfield  Jaffe Sixth Edition 1 Chapter One Introduction to Corporate.

Financial Statement Analysis Chapter 9

© McGraw-Hill Ryerson Limited, 2003 McGraw-Hill Ryerson Chapter 14 Analyzing Financial Statements.

1 Additional Ratios (from textbook, Appendix 4B, and other sources)

Financial Statements, Forecasts, and Planning

(c) 2001 Contemporary Engineering Economics 1 Before making Financial Decision – understand financial situation Accounting records to aid in making decisions.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Nine Financial Statement Analysis © 2015 McGraw-Hill Education.

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. 2-0 Corporate Finance Ross  Westerfield  Jaffe Seventh Edition.

FINANCIAL STATEMENTS.

Chapter Outline 2.1 The Balance Sheet 2.2 The Income Statement

Pre – MBA Program Accounting Ratios Nov 11, 2012.

Chapter 4 Using Financial Statements to Analyze Value Creation

Financial Statement Analysis

Chapter 5: Using Financial Statement Information

Presentation transcript:

Forms of Business Organization The Sole Proprietorship The Partnership –General Partnership –Limited Partnership The Corporation Advantages and Disadvantages –Liquidity and Marketability of Ownership –Control –Liability –Continuity of Existence –Tax Considerations

A Comparison of Partnership and Corporations CorporationPartnership LiquidityShares can easily be exchanged Subject to substantial restrictions. Voting RightsUsually each share gets one vote General Partner is in charge; limited partners may have some voting rights. TaxationDouble with dividend tax credit Partnership income is taxable. ReinvestmentBroad latitudeAll net cash flow is distributed to partners. LiabilityLimited liabilityGeneral partners may have unlimited liability. Limited partners enjoy limited liability. ContinuityPerpetual lifeLimited life

Separation of Ownership and Control Board of Directors Management Assets Debt Equity ShareholdersDebtholders

Sources of Information Statistics Canada: –balance sheets, income statements, selected ratios Dun and Bradstreet Canada: –key business ratios The Financial Post and InfoGlobe: –financial databases Internet –TSX ( OSC

The Balance Sheet An accountant’s snapshot of the firm’s accounting value as of a particular date. The Balance Sheet Identity is: Assets ≡ Liabilities + Stockholder’s Equity

Balance Sheet Analysis When analyzing a balance sheet, the financial manager should be aware of three concerns: 1.Liquidity 2.Debt versus equity 3.Value versus cost

Refers to the ease and speed with which assets can be converted to cash. Current assets are the most liquid. Some fixed assets are intangible. The more liquid a firm’s assets, the less likely the firm is to experience problems meeting short-term obligations. Liquid assets frequently have lower rates of return than fixed assets. Accounting Liquidity

Value versus Cost Under GAAP audited financial statements of firms in Canada carry assets at historical cost adjusted for depreciation. Market value is a completely different concept. It is the price at which willing buyers and sellers trade the assets.

Financial ratios provide information about five areas of financial performance: 1.Short-term solvency 2.Activity 3.Financial leverage 4.Profitability 5.Market value

Short-term solvency ratios Measure the firm’s ability to meet recurring financial obligations A higher current ratio indicates greater liquidity

Activity ratios Measure how effectively the firm’s assets are being managed Example: retail and wholesale trade firms tend to have high asset turnover ratios compared to manufacturing firms

Activity ratios Measure how quickly inventory is produced and sold.

Financial leverage ratios Measure the extent to which a firm relies on debt financing.

Profitability ratios trade firms and service firms tend to have low and high profit ratios respectively.

Market value ratios P/E ratio shows how much investors are willing to pay for $1 of earnings per share. It also reflects investors’ views of the growth potential of different sectors.

Market value ratios (continued) The M/B ratio compares the market value of the firm’s investments to their cost. a M/B value < 1 indicates that the firm has not been successful in creating value for its shareholders.

Remarks on ratios Financial ratios are linked to one another. Measures of profitability do not take risk or timing of cash flows into account.