Jimmy Gentry presents Day Three of "Unlocking Financial Statements," a free, weeklong webinar series hosted by the Donald W. Reynolds National Center for Business Journalism. This training covers income statements, balance sheets, cash flows and tips for finding stories in corporate filings. For more information about free training for business journalists, please visit businessjournalism.org.

1. Unlocking
Financial Statements
Day 3

2. Balance Sheet
Understanding Financial Statements
2

3. Balance Sheet
 It balances
 Assets = Liabilities + Shareholders’
Equity
Understanding Financial Statements
3

4. Assets
 Current assets
 Cash and cash equivalents
 Accounts receivable
 Inventories
 Prepaids
 Investments and other assets
Understanding Financial Statements
4

5. Assets
 Property, plant and equipment, net
 Land and improvement
 Buildings and improvements
 Equipment
 Less accumulated depreciation
 Goodwill and other intangibles
Understanding Financial Statements
5

6. Goodwill
 Difference between what a firm pays to buy
another company and the book value (total
assets minus total liabilities) of that company.
 For years had been written off over time,
typically 40 years
 Now no longer amortize
 Other intangible assets will continue to be
amortized over useful lives
Understanding Financial Statements
6

7. Impairment
 Instead of writing off over time, now use
“impairment testing”
 The impairment is “expensed” on the
income statement
Understanding Financial Statements
7

8. Liabilities
 Current liabilities
 Accounts payable
 Accrued liabilities
 Income taxes
 Current maturity of long-term debt
 Noncurrent liabilities
 Long-term debt
 Deferred income taxes
 Commitments and contingencies
Understanding Financial Statements
8

9. Shareholders’ Equity
 Capital stock
 Preferred stock
 Common stock
 Additional paid-in capital
 Retained earnings
 Treasury stock
 Total shareholders’ equity
 Total L + OE
Understanding Financial Statements
9

10. Presented by:
• James K. Gentry, Ph.D.
• Clyde M. Reed Teaching Professor
• School of Journalism and Mass Communications
• University of Kansas
• jgentry@ku.edu
Understanding Financial Statements
10