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Ch 2 Financial Statements, Cash Flow, And Taxes (2)

Ch 2 Financial Statements, Cash Flow, And Taxes (2)

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FINANCIAL STATEMENTS, CASH FLOW, AND TAXES

taufikur@fe.ugm.ac.id
4/11/2012 1

Financial Statements and Reports
 The Need of Financial Statements and

Reports  The Different between Financial Statements and Financial Reporting  Financial Statements consist of:
– – – –
4/11/2012

The Balance Sheet The Income Statement The Statement of Retained Earnings The Statement of Cash Flows
2

The Balance Sheet  Assets = Liabilities + Equity  Cash versus other assets  Liabilities versus stockholders’ equity  Preferred versus common stock  Breakdown of the common equity accounts  Inventory accounting  Depreciation methods  The time dimension 4/11/2012 3 .

160 939.360 1.200 344.202.600 351. Net FA Total Assets 4/11/2012 2007 7.802 1.124.287.800 4 .950 263.200 1.000 146.Balance Sheet: Assets Cash AR Inventories Total CA Gross FA Less: Deprec.468.000 491.790 2.160 1.200 715.866.800 1.926.592 2006 57.282 632.

160 145.832 663.733.600 136.866.600 Notes payable 720.800 4/11/2012 5 .768 Total L&E 2.468.000 460.000 Retained earnings (327.168) 203.768 Total equity 132.000 200.000.760 Long-term debt 1.592 1.Liabilities and Equity 2006 2007 Accts payable 524.000 323.432 Common stock 460.000 Accruals 489.000 Total CL 481.600 1.

Depletion  EBITDA  EBIT  Net Income 4/11/2012 6 .The Income Statement  Revenue  Expense Vs Cost  Depreciation. Amortization.

000 116.000 (573.600 (346.960 7 Sales COGS Other expenses EBITDA Depr.834. EBIT Interest exp.640 (519. & Amort.624) 58.900 (690.560) 209.500 (866.000 5.400 3.000 2.000 62.432.Income Statement 2006 2007 5.600) 228.000 680. EBT Taxes (40%) Net income 4/11/2012 .000 340.936) 87.100 176.864.960 18.560) 146.728.

25 $0. of shares EPS 100.110 $2.000 ($5.88 DPS Stock price $0.Other Data 2007 No.50 4/11/2012 8 .199) 2006 100.22 $8.000 $0.

Accounting Profit – Net cash flow = NI – Noncash revenue + Noncash charges – Net cash flow = NI + Depreciation and Amortization  Statement of Cash Flow – Operating Activities – Investing Activities – Financing Activities 4/11/2012 9 .Statement of Retained Earnings & Statement of Cash Flow  Statement of Retained Earning – Claim against assets – Not represent cash available for payment dividend and other else  Net Cash Flow Vs.

768 (519.000) ($327.168) 4/11/2012 10 . 12/31/2007 $203.Statement of Retained Earnings (2007) Balance of retained earnings. 2000 Less: Dividends paid Balance of retained earnings.936) (11. 12/31/2007 Add: Net income.

4/11/2012 (519.936) 11 .Statement of Cash Flows (2007) OPERATING ACTIVITIES Net income Add (Sources of cash): Depreciation Increase in A/P Increase in accruals Subtract (Uses of cash): Increase in A/R Increase in inventories Net cash provided by ops.960 378.960) (572.936) 116.600 (280.560 353.160) (523.

318) FINANCING ACTIVITIES Increase in notes payable Increase in long-term debt Payment of cash dividends Net cash from financing NET CHANGE IN CASH Plus: Cash at beginning of year Cash at end of year 4/11/2012 57.000 676.L-T INVESTING ACTIVITIES Investment in fixed assets (711.282 12 .568 (11.185.000) 1.600 7.950) 520.568 (50.

mainly because of negative NI. the cash account fell by $50.185. 4/11/2012 13 .568 to meet its cash requirements.What can you conclude about D’Leon’s financial condition from its statement of CFs?  Net cash from operations = -$523.318.  Even after borrowing.936.  The firm borrowed $1.

Nonoperating Assets – Operating Working Capital. Net Operating Working Capital  Net Operating Profit After Taxes (NOPAT) = EBIT (1 – Tax rate)  Net Operating Working Capital (NOWC) = Current Asset – Non-interest bearing Current liabilities  Free Cash Flow = NOPAT .Accounting Data for Managerial Decisions  Operating Assets and Operating Capital – Operating Assets.Net Investment in operating capital  Market Value Added (MWA) = Market Value of stock – Equity capital supplied by stockholders  Economic Value Added (EVA) = NOPAT – (Operating capital)(After-tax percentage cost of capital) 4/11/2012 14 .

4/11/2012 15 .4) = -$690.560(0.460.Did the expansion create additional net operating profit after taxes (NOPAT)? NOPAT = EBIT(1 – Tax rate) NOPAT07 = -$690.336.6) = -$414.560(1 – 0. NOPAT06 = $125.

282 + $632.160 + $489.360) – ($524.160 + $1. NOWC06 = $842.042.600) = $913. 4/11/2012 16 .287.What effect did the expansion have on net operating working capital (NOWC)? NOWC = Current assets Non-interest – bearing CL NOWC07 = ($7.400.

790 capital07 = $1.852.200.187.042 + $939.What effect did the expansion have on capital used in operations? Operating capital = NOWC + Net fixed assets.832. capital06 4/11/2012 17 . Operating = $913. Operating = $1.

000 $125.832 ($519.200 $87.187.834.400 ($414.336) $913.042 $1.960 Sales NOPAT NOWC Operating capital Net Income 4/11/2012 18 .432.460 $842.936) 2006 $3.What is your initial assessment of the expansion’s effect on operations? 2007 $5.852.400 $1.

OCF07 = NOPAT + DEP = ($414.900 = $144.360.460 + $18.900 = $106.376).936) + $116.What effect did the company’s expansion have on its net cash flow and operating cash flow? NCF07 = NI + DEP = ($519. NCF06 = $87.976).336) + $116.960 + $18.960 = ($402.860. OCF06 = $125. 4/11/2012 19 .960 = ($297.

968.200) = -$414.632 = -$1.336 – ($1.832 – $1.079.336 – $665.852.187. Is negative free cash flow always a bad sign? 4/11/2012 20 .What was the free cash flow (FCF) for 2002 FCF = NOPAT – Net capital investment = -$414.

Economic Value Added (EVA) Operating Income After-Tax Cost EVA = – After Tax of Capital Used Cost of = Funds Available – Capital Used to Investors = NOPAT – After-Tax Cost of Capital Used 4/11/2012 21 .

 EVA takes into account the total cost of capital. which includes the cost of equity. a firm has to more than just cover operating costs. It must also provide a return to those who have provided the firm with capital.EVA Concepts  In order to generate positive EVA. 4/11/2012 22 .

132.336 – (0.592 = -$5.11)($1.336 – $240.13)($1.460 – (0.204.200) = $125. EVA07 = NOPAT – (A-T cost of capital)(Capital) = -$414.What is the company’s EVA? Assume the firm’s after-tax cost of capital was 11% in 2006 and 13% in 2007.460 – $130.187.832) = -$414.852. EVA06= $125. 4/11/2012 23 .868 = -$655.

Consequently. MVA has declined.Would you conclude that the expansion increased or decreased MVA? Market value Equity capital MVA = of equity – supplied During the last year stock price has decreased 73%. so market value of equity has declined. 4/11/2012 24 .

000.000.000.000 Di atas Rp50.000.000.000 Di atas Rp100.000 Di atas Rp200.000 s/d Rp200.000.000.000.000.000 4/11/2012 10 % 15% 30% 25 Di atas Rp100.000.000 s/d Rp100.000 .000 Di atas Rp50.000.000 Tarif Pajak 5% 10% 15% 25% 35% Tarif Pajak atas Wajib Pajak Badan dalam Negeri dan BUT s/d Rp50.000 s/d Rp50. 17 Tahun 2000 – Pajak Penghasilan Tarif Pajak atas Wajib Pajak Orang Pribadi Lapisan Penghasilan Kena Pajak s/d Rp25.Income Tax System  Individual Tax System – UU No.000.000 s/d Rp100.000 Di atas Rp25.

Calculation of Taxable Income Salary net Other income PTKP. istri + 3 anak Taxable Income 200 juta 55.184 juta) 250 juta 4/11/2012 26 .184 juta (5.

500 juta = 7.750 juta 27 4/11/2012 .000 juta = 17.Calculation of Taxable Income Tax Payable: 5% x Rp 25 juta 10% x Rp 25 juta 15% x Rp 50 juta 25% x Rp 100 juta 35% x Rp 55 juta = Rp 1.500 juta Rp53.500 juta = 25.250 juta = 2.

Income Tax System  Taxable Income = Gross income – exemptions and allowable deduction  Marginal Tax Rate  tax rate applicable to the last unit of a person’s income  Average Tax Rate = tax paid : taxable income  Bracket Creep  a situation occurs when progressive tax rates combine with inflation to cause a greater portion of each taxpayer’s real income to be paid as taxes 4/11/2012 28 .

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