Chapter 15

191 views

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
191
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Chapter 15

  1. 1. Learning Goals <ul><li>Explain how firms use accounting. </li></ul><ul><li>Explain how to interpret financial statements. </li></ul><ul><li>Explain how to evaluate a firm’s financial condition. </li></ul>
  2. 2. Accounting <ul><li>Accounting involves the summary and analysis of a firm’s financial condition </li></ul><ul><li>How firms use accounting </li></ul><ul><ul><li>To inform shareholders and creditors (financial accounting) –bookkeeping, audits </li></ul></ul><ul><ul><li>Use financial information to support decisions ( managerial accounting)- </li></ul></ul><ul><ul><li>budgeting , promotion, production </li></ul></ul><ul><li>Use financial information to maintain control: </li></ul><ul><ul><li>Monitor performance of individuals, divisions, and products. </li></ul></ul><ul><ul><li>Identify firm’s strengths and weaknesses. </li></ul></ul>
  3. 3. Interpreting Financial Statements <ul><li>Income statement </li></ul><ul><ul><li>Revenue – Expenses = Profit/Loss </li></ul></ul><ul><li>Balance sheet </li></ul><ul><ul><li>Assets = Liabilities - Owners Equity </li></ul></ul><ul><ul><li>BASIC ACCOUNTING EQUATION </li></ul></ul><ul><li>Statement of Cash Flows </li></ul><ul><ul><li>Three sections – </li></ul></ul><ul><ul><ul><li>cash from operations </li></ul></ul></ul><ul><ul><ul><li>cash from investing </li></ul></ul></ul><ul><ul><ul><li>cash from financing </li></ul></ul></ul>
  4. 4. <ul><li>G:Fin bootcamp2.ppt </li></ul>
  5. 5. Ike’s Bikes - Offering <ul><li>Three different tours will be offered </li></ul><ul><ul><li>“The Fun Tour” - two hours with fun stories and discussions </li></ul></ul><ul><ul><li>“The Thigh Burner” – An evening ride from McCall Park to Council Crest Park and back </li></ul></ul><ul><ul><li>“The Pub Ride” – a week end tour of Portland Pubs </li></ul></ul>
  6. 6. The Numbers <ul><li>Projecting Only Weekend Fun Tours from October to April </li></ul><ul><ul><li>Price $25 per ride </li></ul></ul><ul><li>Thigh Burners only on weekend evening all year </li></ul><ul><ul><li>Price $10 per ride </li></ul></ul><ul><li>Pub Rides on Weekends </li></ul><ul><ul><li>$25 per tour ride </li></ul></ul><ul><li>Cost $50 pay for each tour </li></ul>
  7. 7. <ul><li>G:Mgt accounting Ikes Bikes2.xls </li></ul>
  8. 8. Tektronix 2005 Annual Report <ul><li>LIST NAMES OF ALL GROUP MEMBERS PRESENT TODAY- </li></ul><ul><li>1. What are the earnings per share for 2003, </li></ul><ul><li>2004 and 2005 (what does this tell you?) </li></ul><ul><li>2. What is the company value(total assets) and return on assets 2004, 2005? </li></ul><ul><li>3. What is the quick ratio for 2004, 2005 (Why variations)? </li></ul><ul><li>4. What is the Return on Equity for 2004 and 2005? </li></ul><ul><li>What is the return on sales for 2003,2004, and 2005? </li></ul><ul><li>Is Tektronix using or creating cash? </li></ul>
  9. 9. Responsible Financial Reporting <ul><li>Accounting methods that provide the most accurate indication of a firm’s financial condition </li></ul><ul><ul><li>Helps gain credibility with existing and potential stockholders </li></ul></ul><ul><ul><li>Makes it easier for managers to detect and correct deficiencies </li></ul></ul><ul><li>Role of Auditors </li></ul><ul><ul><li>Certify that financial reports are accurate and within generally accepted reporting guidelines (GAAP). </li></ul></ul>
  10. 10. Ratio Analysis <ul><li>Evaluate the relationships between financial statement variables </li></ul><ul><ul><li>Compare ratios with other companies in the same industry </li></ul></ul><ul><ul><li>Assess change in ratios over time </li></ul></ul><ul><ul><li>Common ratios </li></ul></ul><ul><ul><ul><li>Liquidity </li></ul></ul></ul><ul><ul><ul><li>Efficiency </li></ul></ul></ul><ul><ul><ul><li>Financial leverage </li></ul></ul></ul><ul><ul><ul><li>Profitability </li></ul></ul></ul>
  11. 11. Ratio Analysis <ul><li>Comparing ratios </li></ul><ul><ul><li>Sources: Robert Morris Assoc. & Dun and Bradstreet. </li></ul></ul><ul><li>Limitations of ratio analysis </li></ul><ul><ul><li>Firms might operate in more than one industry - makes comparisons difficult. </li></ul></ul><ul><ul><li>Accounting practices vary among firms </li></ul></ul><ul><ul><li>Seasonality can impact ratios </li></ul></ul>
  12. 12. Next Time <ul><li>Read chapter 16 - finance </li></ul><ul><li>In text study guide </li></ul><ul><li>Meet with group – should have : </li></ul><ul><ul><ul><li>Started gathering financial info. – initial costs, monthly costs, and break even (we will discuss more next class) </li></ul></ul></ul><ul><ul><ul><li>Library Research on International (five areas…) and exchange rate history. Projection is based on monthly purchase (or sales) with international partner (ex. Mexican rest. – tequila ONLY) </li></ul></ul></ul>
  13. 13. Homework <ul><li>Develop a Sales and Contribution Margin plan monthly for the first year and then yearly for the next year </li></ul><ul><li>Be prepared to make a presentation of your beginning financial plan next week </li></ul><ul><ul><li>Sales and variable costs first 12 months and 2 nd year </li></ul></ul><ul><ul><li>No selling, marketing, administrative yet </li></ul></ul>

×