Class notes
Financial Management 2 notes
- Course
- Institution
- Book
Financial Management 2 notes
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Exam Summary Financial Management 2, FM2, AMSIB
-
Summary chapters 3-4-5-10-15 | Principles of Managerial Finance, Global Edition, ISBN: 9781292018201 Financial Management 2 (2060FM2_19)
-
FIN3701 Exam Memo June 2019
Seller
Follow
mariacristina1
Content preview
Financial Management 2Week 1 (Chapter 3: Financial Statements and Ratio Analysis)
The four financial statements:
1. Income Statement (provides a financial summary of the firms operating
results during a specified period)
2. Balance Sheet
3. Statement of Retained Earnings
4. Statement of Cash Flows (discussed in chapter 2)
*EBIT= Earnings before interest and tax (Operating profits)
*Accounts payable= the payment of money to a supplier
Notes payable= a promise to pay someone money (a loan)
Income statement:
+Sales
-COGS
-Operating expenses
-TAX
= Net profit after tax
*Sole proprietor of a business’ salaries= withdrawals (does NOT count as a salary
expense)
*Financial performance is relative; The assets employed to generate these sales and
profits need to be taken into account for a comprehensive explanation of financial
performance!
Balance sheet:
+Total current assets (Cash, accounts receivable, inventories, land, machinery etc)
-Liabilities (current: notes payable, accruals etc; long term debt)
= Stockholder’s equity
EQUITY= COMMON STOCK + RETAINED EARNINGS
Current assets = can be converted in cash a relatively short amount of time (1
business cycle = 1 year) marketable securities, accounts receivable, inventories
Statement of retained earnings (links income statement to the balance sheet)
, Week 2 (Chapter 3: Ratio Analysis)
Ratio analysis= methods of calculating and interpreting financial ratios to analyse
and monitor a firm’s performance
Assets = Liabilities + Equity (Must balance out on the balance sheet)
Liquidity = the ability to pay debts when they are due (the most liquid form of
assets is cash)
Ratio comparisons:
1. Cross sectional= comparison between different firms at the same point in
time
2. Time series= evaluates performance (of a single firm) over time
Du Pont analysis/system> provides info on ROE (=what is left of net profit after
paying shareholders)
Week 3 (Chapter 4: Long- and Short-Term Financial Planning)
The Statement of Cash Flows= explains the net change in cash during a period
(inflows and outflows of cash)
The change in cash can be found on the balance sheet: the difference from PP
Three parts of SOCF:
1. Cash Flows from Operating Activities (=changes in cash due to net income,
depreciation adjustments, and changes in current assets and liabilities)
2. Cash Flows from Investing Activities (=acquisition and sale of long term
assets: fixed assets, property, plant, equipment etc;
it does NOT deal with investments from stockholders (that is included in cash flow
from financing)
3. Cash Flows from Financing Activities (=investors and creditors; long-term
debts): new stock issued, paying dividends
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller mariacristina1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.26. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
83662 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now