Fundamentals of Investments 7 C h a p t e r Earnings and Cash Flow Analysis second edition Valuation & Management Charles J. Corrado Bradford D. Jordan McGraw Hill / Irwin Slides by Yee-Tien (Ted) Fu
Our goal in this chapter is to acquaint you with the financial accounting concepts necessary to understand basic financial statements and perform earnings and cash flow analysis using these financial statements.
SEC Regulation FD ( Fair Disclosure ) requires companies making a public disclosure of material nonpublic information to do so fairly without preferential recipients.
Most companies satisfy Regulation FD by distributing important announcements via e-mail alerts to those who register for the service.
Financial Statements Balance sheet Accounting statement that provides a snapshot view of a company’s assets and liabilities on a particular date. Income statement Summary statement of a firm’s revenues and expenses over a specific accounting period, usually a quarter or a year.
Financial Statements Cash flow statement Analysis of a firm’s sources and uses of cash over the accounting period, summarizing operating, investing, and financing cash flows.
Financial Statement Forecasting Pro forma financial statements Statements prepared using certain assumptions about future income, cash flow, and other items. Pro forma literally means according to prescribed form.