FI 3300 FINAL EXAM

Assets

Assets

Current Assets

• cash

• net accounts receivable (gross - allowance for doubtful accounts)

• Inventories

Long term assets

• Net fixed assets (gross fixed assets - less accumulated depreciation)

= total assets

Liabilities

Current liabilities

• notes payable

• accounts payable

• accrued expenses

• current portion long term debt

Long term liabilities

• long term debt (less current portion)

= total liabilites

Stockholder's equity

Common stock Preferred stock Additional paid in capital Retained earnings

= total equity

Net accounts receivable

Gross accounts receivable - allowance for doubtful accounts

Net fixed assets

net fixed assets = gross fixed assets - accumulated depreciation

Annual addition to retained earnings

Annual addition to RE = Net income - dividend payout

Year end Retained earnings

year end RE = beginning RE + annual addition to RE

Cost of goods sold

COGS = Beginning inv + material purchases - ending inv

Net sales

Gross sales - sales returns & allowances

Debt to equity ratio

total liabilities / equity

Income statement

Net sales

• COGS = Gross profit

• operating expenses (less depreciation if retail biz) = Operating profit (EBIT)

• interest expense = EBT (earnings before taxes)

• taxes = Net Income

OpEx

1. Management salaries

2. R&D

3. Lease payments

4. Repairs & Maintenance

5. General and admin expenses

Common size income statement

Income statement item / net sales

Common size balance sheet

Balance sheet item / total assets

Tax equivalent yield

= tax free yield / (1 - tax rate)

Required rate of return

R(equity) = R(risk free) + B(Rm - Rf)M

Market risk premium

= Rm - Rf

WACC

Weight of Debt ((1 - tax rate)(Rdebt) + Weight of equity (rate of equity)

CFO - Cash flow from ops

Net income

• Depreciation

• increase in assets (AR/Inventories)

• increase in liabilities (AP/accruals)

CFI - Cash flow from investments

0 Change in Gross fixed assets (Change in net fixed assets + current year dep) +/-

CFF - Cash flow from financing

0 +/- Change in notes payable, CLTD, LTD, Stock, additional paid in capital

• Dividend (= NI - Change in RE)