1. Financial Analysis and Reporting for a Corporation
Chapter 13
Financial Analysis and Reporting for a Corporation

2. Three Financial statements that corporations prepare
Income Statement
Statement of stockholders’ Equity
Balance Sheet

3. Adjustments on the corporate worksheet
First new adjustment
Organizational Costs
Organizational Expenses
Amortization – to recognize a portion of an expense over a number of years.

4. Adjustments on the corporate worksheet
Second new adjustment
Federal Income tax payable
Federal Income tax expense

5. Calculating Federal Income Tax Payable
We must first determine Net Income
Then using the tax rates we determine what the taxes are for the corporation.

6. Lets give you an example
Lets say that our net income before taxes was $130,000
Here is how the tax rate is broken down.
15% of net income 0 to $50,000
25% of net income $50,000 to $75,000
34% of net income $75,000 to $100,000
39% of net income $100,000 to $335,000
34% of net income over $335,000

7. So lets figure the taxes
Net income before taxes is $130,000
$50, x % = $7,500
$25, x % = $6,250
$25, x %% = $8,500
$30, x %% = $11,700
$130, $33,950
This is the number that we actually owe to the government

8. We then take a look at what we estimated and pay what is left over.
Total Federal Income – Estimated Federal Income Tax already paid.
= Accrued Federal Income Tax Expense

9. Financial Statements and Analysis 13-2
This is the part of the textbook where we start to play with the numbers and get to understand what things mean…..

10. Share of net income assigned to preferred and common stock
We have preferred stock at 8% of par value. We have to determine what the share of net income goes to common and preferred.

11. Earnings Per Share
The amount of net income belonging to a single share of stock.
Common Stock Share of Net Income /
Shares outstanding =
Earnings Per Share
$ ,142.51
31,950 $

12. Equity per Share

13. More Terms Market Value Price- Earning Ratio
The price at which a share of stock may be sold on the stock market
Price- Earning Ratio
The relationship between the market value per share and the earnings per share.

14. Price-Earnings Ratio

15. Calculating A/R Turnover Ratio

16. Finishing A/R Turnover Ratio

17. Rate Earned on Average Stockholders Equity

18. Rate Earned on Average Total Assets

19. End of Fiscal Period Work
Adjusting Entries
A little different than in the past
Look at page 363 and the worksheet on page 352
Notice the adjusting entry Payroll Tax Expense
Closing Entries
Nothing really different except:
Last two entries
Income summary to retained earnings
Dividend to retained earnings