Principles of Managerial Finance

LEARNING GOALS 40 FINANCIAL STATEMENTS AND ANALYSIS CHAPTER Across the Disciplines WHY THIS CHAPTER MATTERS TO YOU Accounting:Yo ...

41 F inancial reporting is no longer the primary responsibility of the chief financial officer (CFO). The role of today’s CFO, a ...

42 PART 1 Introduction to Managerial Finance generally accepted accounting principles (GAAP) The practice and procedure guidelin ...

CHAPTER 2 Financial Statements and Analysis 43 TABLE 2.1 Bartlett Company Income Statements ($000) For the years ended December ...

44 PART 1 Introduction to Managerial Finance dividend per share (DPS) The dollar amount of cash distributed during the period on ...

CHAPTER 2 Financial Statements and Analysis 45 TABLE 2.2 Bartlett Company Balance Sheets ($000) December 31 Assets 2003 2002 Cur ...

46 PART 1 Introduction to Managerial Finance For convenience the term fixed assetsis used throughout this text to refer to what ...

CHAPTER 2 Financial Statements and Analysis 47 retained earnings The cumulative total of all earnings, net of dividends, that ha ...

48 PART 1 Introduction to Managerial Finance TABLE 2.4 Bartlett Company Statement of Cash Flows ($000) for the Year Ended Decemb ...

CHAPTER 2 Financial Statements and Analysis 49 Financial Accounting Standards Board (FASB) Standard No. 52 Mandates that U.S.-ba ...

50 PART 1 Introduction to Managerial Finance benchmarking A type of cross-sectional analysisin which the firm’s ratio values are ...

CHAPTER 2 Financial Statements and Analysis 51 time-series analysis Evaluation of the firm’s financial performance over time usi ...

52 PART 1 Introduction to Managerial Finance FIGURE 2.1 Combined Analysis Combined cross-sectional and time-series view of Bartl ...

CHAPTER 2 Financial Statements and Analysis 53 seasonalitymay produce erroneous conclusions and decisions. For example, comparis ...

54 PART 1 Introduction to Managerial Finance current ratio A measure of liquidity calculated by dividing the firm’s current asse ...

CHAPTER 2 Financial Statements and Analysis 55 inventory turnover Measures the activity, or liquid- ity, of a firm’s inventory. ...

56 PART 1 Introduction to Managerial Finance average age of inventory Average number of days’ sales in inventory. average paymen ...

CHAPTER 2 Financial Statements and Analysis 57 total asset turnover Indicates the efficiency with which the firm uses its assets ...

58 PART 1 Introduction to Managerial Finance degree of indebtedness Measures the amount of debt relative to other significant ba ...

CHAPTER 2 Financial Statements and Analysis 59 debt ratio Measures the proportion of total assets financed by the firm’s credito ...