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Understanding  Financial Statements <ul><ul><ul><ul><ul><li>Online Seminar </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><...
<ul><li>An Online Seminar Presented By  </li></ul><ul><li>Donald W. Reynolds National Center </li></ul><ul><li>For Busines...
Presented By <ul><li>James K. Gentry, Ph.D. </li></ul><ul><li>Clyde M. Reed Teaching Professor </li></ul><ul><li>School of...
Schedule for Week <ul><li>Day 1: Introduction to financial statements </li></ul><ul><li>Day 2: Income statement </li></ul>...
<ul><li>Balance Sheet </li></ul>Understanding Financial Statements
Balance Sheet <ul><li>It balances </li></ul><ul><li>Assets = Liabilities + Shareholders’ Equity </li></ul>Understanding Fi...
Assets <ul><li>Current assets </li></ul><ul><ul><li>Cash and cash equivalents </li></ul></ul><ul><ul><li>Accounts receivab...
Assets <ul><li>Property, plant and equipment, net </li></ul><ul><ul><li>Land and improvement </li></ul></ul><ul><ul><li>Bu...
Goodwill <ul><li>Difference between what a firm pays to buy another company and the book value (total assets minus total l...
Impairment <ul><li>Instead of writing off over time, now use “impairment testing” </li></ul><ul><li>The impairment is expe...
Liabilities <ul><li>Current liabilities </li></ul><ul><ul><li>Accounts payable </li></ul></ul><ul><ul><li>Accrued liabilit...
Shareholders’ Equity <ul><li>Capital stock </li></ul><ul><ul><li>Preferred stock </li></ul></ul><ul><ul><li>Common stock <...
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Day Three with Jimmy Gentry: Understanding Financial Statements

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Jimmy Gentry presents "Understanding Financial Statements," a Webinar hosted by the Donald W. Reynolds National Center for Business Journalism. For more information, visit http://businessjournalism.org.

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Transcript of "Day Three with Jimmy Gentry: Understanding Financial Statements"

  1. 1. Understanding Financial Statements <ul><ul><ul><ul><ul><li>Online Seminar </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Day 3 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Nov. 11, 2009 </li></ul></ul></ul></ul></ul>
  2. 2. <ul><li>An Online Seminar Presented By </li></ul><ul><li>Donald W. Reynolds National Center </li></ul><ul><li>For Business Journalism </li></ul><ul><li>At Arizona State University </li></ul>Understanding Financial Statements
  3. 3. Presented By <ul><li>James K. Gentry, Ph.D. </li></ul><ul><li>Clyde M. Reed Teaching Professor </li></ul><ul><li>School of Journalism and Mass Communication </li></ul><ul><li>University of Kansas </li></ul><ul><li>[email_address] </li></ul>Understanding Financial Statements
  4. 4. Schedule for Week <ul><li>Day 1: Introduction to financial statements </li></ul><ul><li>Day 2: Income statement </li></ul><ul><li>Day 3: Balance sheet </li></ul><ul><li>Day 4: Cash flows </li></ul><ul><li>Day 5: Beyond the basics </li></ul>Understanding Financial Statements
  5. 5. <ul><li>Balance Sheet </li></ul>Understanding Financial Statements
  6. 6. Balance Sheet <ul><li>It balances </li></ul><ul><li>Assets = Liabilities + Shareholders’ Equity </li></ul>Understanding Financial Statements
  7. 7. Assets <ul><li>Current assets </li></ul><ul><ul><li>Cash and cash equivalents </li></ul></ul><ul><ul><li>Accounts receivable </li></ul></ul><ul><ul><li>Inventories </li></ul></ul><ul><ul><li>Prepaids </li></ul></ul><ul><li>Investments and other assets </li></ul>Understanding Financial Statements
  8. 8. Assets <ul><li>Property, plant and equipment, net </li></ul><ul><ul><li>Land and improvement </li></ul></ul><ul><ul><li>Buildings and improvements </li></ul></ul><ul><ul><li>Equipment </li></ul></ul><ul><ul><li>Less accumulated depreciation </li></ul></ul><ul><li>Goodwill and other intangibles </li></ul>Understanding Financial Statements
  9. 9. Goodwill <ul><li>Difference between what a firm pays to buy another company and the book value (total assets minus total liabilities) of that company. </li></ul><ul><li>Has been written off over time, typically 40 years </li></ul><ul><li>No longer amortize </li></ul><ul><li>Other intangible assets will continue to be amortized over useful lives </li></ul>Understanding Financial Statements
  10. 10. Impairment <ul><li>Instead of writing off over time, now use “impairment testing” </li></ul><ul><li>The impairment is expensed on the income statement </li></ul>Understanding Financial Statements
  11. 11. Liabilities <ul><li>Current liabilities </li></ul><ul><ul><li>Accounts payable </li></ul></ul><ul><ul><li>Accrued liabilities </li></ul></ul><ul><ul><li>Income taxes </li></ul></ul><ul><ul><li>Current maturity of long-term debt </li></ul></ul><ul><li>Noncurrent liabilities </li></ul><ul><ul><li>Long-term debt </li></ul></ul><ul><ul><li>Deferred income taxes </li></ul></ul><ul><li>Commitments and contingencies </li></ul>Understanding Financial Statements
  12. 12. Shareholders’ Equity <ul><li>Capital stock </li></ul><ul><ul><li>Preferred stock </li></ul></ul><ul><ul><li>Common stock </li></ul></ul><ul><li>Additional paid-in capital </li></ul><ul><li>Retained earnings </li></ul><ul><li>Treasury stock </li></ul><ul><ul><li>Total shareholders’ equity </li></ul></ul><ul><ul><li>Total L + OE </li></ul></ul>Understanding Financial Statements

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