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Lesson 13-2 Financial Statements and Analysis

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Presentation on theme: "Lesson 13-2 Financial Statements and Analysis"— Presentation transcript:

1 Lesson 13-2 Financial Statements and Analysis
1/16/2019 LESSON 13-2 Financial Statements and Analysis RED

2 INCOME STATEMENT FOR A CORPORATION
page 377 LESSON 13-2

3 INCOME STATEMENT FOR A CORPORATION
page 377 LESSON 13-2

4 ACCEPTABLE AND ACTUAL COMPONENT PERCENTAGES
page 378 LESSON 13-2

5 SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCK
Lesson 13-2 1/16/2019 SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCK page 378 Calculating Share of Net Income for Preferred Stock Total Par Value Dividend Rate = Preferred Stock’s Share of Net Income $170,000.00 8% = $13,600.00 LESSON 13-2 RED

6 SHARE OF NET INCOME ASSIGNED TO COMMON STOCK
Lesson 13-2 1/16/2019 SHARE OF NET INCOME ASSIGNED TO COMMON STOCK page 378 Calculating Share of Net Income for Preferred Stock Total Net Income Preferred Stock’s Share of Net Income = Common Stock’s Share of Net Income $96,742.51 $13,600.00 = $83,142.51 LESSON 13-2 RED

7 Shares of Stock Outstanding
Lesson 13-2 1/16/2019 EARNINGS PER SHARE page 379 Calculating Earnings per Share Share of Net Income Shares of Stock Outstanding = Earnings per Share ÷ $83,142.51 31,950 = $2.60 ÷ LESSON 13-2 RED

8 STATEMENT OF STOCKHOLDERS’ EQUITY FOR A CORPORATION
page 379 1. Paid-in capital section 2. Retained earnings section LESSON 13-2

9 ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY
Lesson 13-2 1/16/2019 ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380 Calculating Equity per Share Total Stockholders’ Equity Shares of Capital Stock Outstanding = Equity per Share ÷ $170,000.00 1,700 = $100.00 ÷ Preferred 448,655.86 31,950 = 14.04 ÷ Common $618,655.86 Total LESSON 13-2 RED

10 ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY
Lesson 13-2 1/16/2019 ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380 Calculating Price-Earnings Ratio Market Price per Share Earnings per Share = Price-Earnings Ratio ÷ $19.50 $2.60 = 7.5 times ÷ LESSON 13-2 RED

11 BALANCE SHEET FOR A CORPORATION
page 381 LESSON 13-2

12 BALANCE SHEET FOR A CORPORATION
page 381 LESSON 13-2

13 ACCOUNTS RECEIVABLE TURNOVER RATIO
page 382 Calculating the average book value of accounts receivable Beginning Book Value = Allowance for Uncollectible Accounts Beginning Balance – Accounts Receivable Beginning Balance $120,621.71 = $4,362.18 – $124,983.89 Ending Book Value = Allowance for Uncollectible Accounts Ending Balance – Accounts Receivable Ending Balance $128,536.91 = $6,697.63 – $135,234.54 Average Book Value of Accounts Receivable = 2 ÷ Ending Book Value of Accounts Receivable + Beginning Book Value of Accounts Receivable $124,579.31 = 2 ÷ $128,536.91) + ($120,621.71 LESSON 13-2

14 ACCOUNTS RECEIVABLE TURNOVER RATIO
page 382 Calculating the accounts receivable turnover ratio Net Sales on Account Average Book Value of Accounts Receivable = Accounts Receivable Turnover Ratio ÷ $861,356.72 $124,579.31 = 6.9 times ÷ LESSON 13-2

15 ACCOUNTS RECEIVABLE TURNOVER RATIO
page 382 Calculating the average number of days for payment Days in Year Accounts Receivable Turnover Ratio = Average Number of Days for Payment ÷ 365 6.9 = 53 ÷ LESSON 13-2

16 RATE EARNED ON AVERAGE STOCKHOLDERS’ EQUITY
page 383 Calculate average stockholders’ equity Average Stockholders’ Equity = 2 ÷ December 31 Stockholders’ Equity + January 1 Stockholders’ Equity $498,622.11 = 2 ÷ $618,655.86) + ($378,588.35 Calculate the rate earned Rate Earned on Average Stockholders’ Equity = Average Stockholders’ Equity ÷ Net Income after Federal Income Tax 19.4% = $498,622.11 ÷ $96,742.51 LESSON 13-2

17 RATE EARNED ON AVERAGE TOTAL ASSETS
page 383 Calculate average total assets Average Total Assets = 2 ÷ December 31 Total Assets + January 1 Total Assets $838,573.69 = 2 ÷ $952,171.03) + ($724,976.34 Calculate the rate earned Rate Earned on Average Total Assets = Average Total Assets ÷ Net Income after Federal Income Tax 11.5% = $838,573.69 ÷ $96,742.51 LESSON 13-2

18 TERMS REVIEW earnings per share equity per share market value
page 365 earnings per share equity per share market value price-earnings ratio rate earned on average stockholders’ equity rate earned on average total assets LESSON 13-2

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