Interpreting and Analyzing Financial Statements

Chapter 1: Introduction <br>Nike, Under Armour, Adidas <br>WHAT IS ACCOUNTING? <br>THE FOUR FINANCIAL STATEMENTS <br>THE BALANCE SHEET <br>THE INCOME STATEMENT <br>STATEMENT OF STOCKHOLDERS’ EQUITY <br>STATEMENT OF CASH FLOWS <br>GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) <br>Historical Cost Principle <br>INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) <br>RATIO ANALYSIS <br>Debt Ratio <br>Asset Turnover Ratio <br>Return on Sales (ROS) Ratio <br>Return on Assets (ROA) Ratio <br>TREND ANALYSIS <br>COMMON-SIZE STATEMENTS <br>ACTIVITIES <br> <br> Chapter 2: Balance Sheet<br>The Walt Disney Company, News Corp, Time Warner <br>INTRODUCTION <br>UNDERSTANDING THE WALT DISNEY COMPANY’S BALANCE SHEET <br>Current Assets <br>Noncurrent Assets <br>Current Liabilities <br>Noncurrent Liabilities <br>INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) <br>DEBT VERSUS EQUITY <br>ANALYZING THE BALANCE SHEET <br>Liquidity: Current Ratio <br>Solvency: Debt Ratio <br>Trend Analysis <br>Common-size Balance Sheet <br>ACTIVITIES <br> <br> Chapter 3: Income Statement<br>Amazon.com, Sears Holdings, eBay, Starbucks <br>INTRODUCTION <br>UNDERSTANDING AMAZON.COM’S INCOME STATEMENT <br>STEP ONE: REVENUES — COST OF SALES = GROSS PROFIT <br>Revenues and Revenue Recognition <br>Expenses and the Matching Principle <br>STEP TWO: GROSS PROFIT — OPERATING EXPENSES = OPERATING INCOME <br>STEP THREE: OPERATING INCOME +/- NONOPERATING REVENUES AND EXPENSES = INCOME BEFORE INCOME TAX <br>STEP FOUR: INCOME BEFORE INCOME TAX — PROVISION FOR INCOME TAX = INCOME FROM CONTINUING OPERATIONS <br>STEP FIVE: INCOME FROM CONTINUING OPERATIONS +/- NONRECURRING ITEMS = NET INCOME <br>ANALYZING THE INCOME STATEMENT <br>Return on Sales <br>Asset Turnover Ratio <br>Return on Assets <br>Gross Profit Margin <br>Trend Analysis <br>Common-Size Analysis <br>ACTIVITIES <br> <br> Chapter 4: Statement of Stockholders’ Equity <br>Freeport-McMoRan Copper &amp; Gold <br>INTRODUCTION <br>STOCKHOLDERS’ EQUITY ON THE BALANCE SHEET <br>STATEMENT OF STOCKHOLDERS’ EQUITY <br>TREASURY STOCK <br>RETAINED EARNINGS <br>OTHER COMPREHENSIVE INCOME <br>STOCK SPLITS &amp; STOCK DIVIDENDS <br>RETURN ON EQUITY <br>FINANCIAL LEVERAGE RATIO <br>TIMES INTEREST EARNED RATIO <br>EARNINGS PER SHARE <br>DIVIDEND RATE <br>PRICE EARNINGS RATIO <br>ACTIVITIES <br> <br> Chapter 5: Statement of Cash Flows<br>Cedar Fair, L.P. <br>INTRODUCTION <br>THREE CATEGORIES OF CASH FLOWS <br>Financing Activities <br>Investing Activities <br>Operating Activities <br>Operating Activities—The Direct Method <br>Operating Activities—The Indirect Method <br>INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) <br>ANALYZING THE STATEMENT OF CASH FLOWS <br>Free Cash Flow <br>Cash Flow Adequacy <br>Cash Flow Liquidity <br>Quality of Income <br>ACTIVITIES <br> <br> Chapter 6: Specific Accounts <br>Research in Motion Limited, Motorola Mobility, Inc. <br>INTRODUCTION <br>CASH AND CASH EQUIVALENTS <br>INVESTMENTS <br>ACCOUNTS RECEIVABLE <br>Accounts Receivable Turnover <br>Accounts Receivable Days <br>INVENTORY <br>Specific Identification <br>First-In, First-Out <br>Last-In, First-Out <br>International Financial Reporting Standards <br>Gross Profit Margin <br>Inventory Turnover <br>Inventory Days <br>PROPERTY, PLANT, AND EQUIPMENT <br>Straight-Line Depreciation <br>Double-Declining Balance Depreciation <br>Comparing Straight-Line with Double-Declining Balance <br>Gains and Losses on Sale of PPE <br>International Financial Reporting Standards <br>CURRENT AND LONG-TERM LIABILITIES <br>ACTIVITIES <br> <br> Chapter 7: The Accounting Cycle<br>INTRODUCTION <br>THE 10-STEP ACCOUNTING CYCLE <br>ANALYZE TRANSACTIONS USING THE ACCOUNTING EQUATION <br>PREPARE JOURNAL ENTRIES USING DEBITS AND CREDITS <br>Step 1: Analyze and Prepare Transaction Journal Entries (TJEs) <br>Step 2: Post TJEs to the Ledger <br>Step 3: Prepare the Unadjusted Trial Balance <br>Step 4: Prepare Adjusting Journal Entries (AJEs) <br>Step 5: Post AJEs to the Ledger <br>St