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Financial
Statements,
Taxes, and Cash
Flow
Introducing Financial Statements
The Income Statement
The Balance Sheet
Tax Considerations
The Statement of Cash Flows
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Financial
Statements,
Taxes, and Cash
Flow
(continued)
Other Statements
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Financial Statements, Taxes, and Cash Flow > Introducing Financial Statements
Introducing Financial Statements
• Defining the Financial Statement
• Uses of the Financial Statement
• Limitations of Financial Statements
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Financial Statements, Taxes, and Cash Flow > Introducing Financial Statements
Defining the Financial Statement
• Financial statements are formally prepared documents communicating an entity's
financial activities to parties including investors, management and tax officials.
• An entity's financial statement typically includes four basic components: a balance
sheet, income statement, cash flow statement, and statement of changes in
equity.
• The balance sheet reports a point-in-time snapshot of the assets, liabilities and
equity of the entity.
• An income statement reports on a company's expenses and profits to show
whether the company made or lost money.
• The cash flow statement reports the flow of cash in and out of the business,
Keeping Money Organized
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dividing cash into operating, investing and financing activities.
• A statement of changes in equity explains the changes of the company's equity
throughout the reporting period, including profits or losses, dividends paid and
issue or redemption of stock.
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Financial Statements, Taxes, and Cash Flow > Introducing Financial Statements
Uses of the Financial Statement
• Owners and managers use financial statements to make important long-term
business decisions. For example: whether or not to continue or discontinue part of
its business, to make or purchase certain materials, or to acquire or rent/lease
certain equipment in the production of its goods.
• Prospective investors use financial statements to perform financial analysis, which
is a key component in making investment decisions.
• A lending institution will examine the financial health of a person or organization
and use the financial statement to decide whether or not to lend funds.
Budget
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Financial Statements, Taxes, and Cash Flow > Introducing Financial Statements
Limitations of Financial Statements
• One limitation of financial statements is that they are open to human interpretation
and error, in some cases even intentional manipulation of figures to inflate
economic performance.
• Another set of limitations of financial statements arises from different ways of
accounting for activities across time periods and across companies, which can
make comparisons difficult.
• Another limit to financial statements as a window into the creditworthiness or
investment attractiveness of an entity is that financial statements focus solely on
financial measures. Some argue for a "triple bottom line" including social and
environmental measures.
Consolidated financial statements
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Financial Statements, Taxes, and Cash Flow > The Income Statement
The Income Statement
• Elements of the Income Statement
• Limitations of the Income Statement
• Effects of GAAP on the Income Statement
• Noncash Items
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Financial Statements, Taxes, and Cash Flow > The Income Statement
Elements of the Income Statement
• The income statement consists of revenues and expenses along with the resulting
net income or loss over a period of time due to earning activities. The income
statement shows investors and management if the firm made money during the
period reported.
• The operating section of an income statement includes revenue and expenses.
Revenue consists of cash inflows or other enhancements of assets of an entity,
and expenses consist of cash outflows or other using-up of assets or incurring of
liabilities.
• The non-operating section includes revenues and gains from non-primary
business activities, items that are either unusual or infrequent, finance costs like
A Sample Income Statement
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interest expense, and income tax expense.
• The "bottom line" of an income statement is the net income that is calculated after
subtracting the expenses from revenue. It is important to investors - also on a per
share basis (as earnings per share, EPS) - as it represents the profit for the
accounting period attributable to the shareholders.
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Financial Statements, Taxes, and Cash Flow > The Income Statement
Limitations of the Income Statement
• Income statements include judgments and estimates, which mean that items that
might be relevant but cannot be reliably measured are not reported and that some
reported figures have a subjective component.
• With respect to accounting methods, one of the limitations of the income
statement is that income is reported based on accounting rules and often does
not reflect cash changing hands.
• Income statements can also be limited by fraud, such as earnings management,
which occurs when managers use judgment in financial reporting to intentionally
alter financial reports to show an artificial increase (or decrease) of revenues,
profits, or earnings per share figures.
Income statement
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Financial Statements, Taxes, and Cash Flow > The Income Statement
Effects of GAAP on the Income Statement
• Items that create temporary differences due to the recording requirements of
GAAP include rent or other revenue collected in advance, estimated expenses,
and deferred tax liabilities and assets.
• Also there are events, usually one-time events, which create "permanent
differences," such as GAAP recognizing as an expense an item that the IRS will
not allow to be deducted.
• The four basic principles of GAAP can affect items on the income statement.
These principles include the historical cost principle, revenue recognition principle,
matching principle, and full disclosure principle.
Income statement
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Financial Statements, Taxes, and Cash Flow > The Income Statement
Noncash Items
• Noncash items should be added back in when analyzing income statements to
determine cash flow because they do not contribute to the inflow or outflow of
cash like other gains and expenses eventually do.
• Depreciation refers to the decrease in value of assets and the allocation of the
cost of assets to periods in which the assets are used--for tangible assets, such
as machinery.
• Amortization is a similar process to deprecation when applied to intangible assets,
such as patents and trademarks.
Machinery
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
The Balance Sheet
• Assets
• Liabilities and Equity
• Working Capital
• Liquidity
• Debt to Equity
• Market Value vs. Book Value
• Limitations of the Balance Sheet
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Assets
• The main categories of assets are usually listed first, and normally, in order of
liquidity. On a balance sheet, assets will typically be classified into current assets
and non-current (long-term) assets.
• Current assets are those assets which can either be converted to cash or used to
pay current liabilities within 12 months. Current assets include cash and cash
equivalents, short-term investments, accounts receivable, inventories and the
portion of prepaid liabilities paid within a year.
• A non-current asset cannot easily be converted into cash. Non-current assets
include property, plant and equipment (PPE), investment property, intangible
assets, long-term financial assets, investments accounted for using the equity
Balance Sheet
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method, and biological assets.
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Liabilities and Equity
• In financial accounting, a liability is defined as an obligation of an entity arising
from past transactions or events, the settlement of which may result in the
transfer or use of assets, provision of services or other yielding of economic
benefits in the future.
• Equity is the residual claim or interest of the most junior class of investors in
assets, after all liabilities are paid.
• The types of accounts and their description that comprise the owner's equity
depend on the nature of the entity and may include: Common stock, preferred
stock, capital surplus, retained earnings, treasury stock, stock options and
reserve.
Accounting equation
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Working Capital
• Net working capital is calculated as current assets minus current liabilities.
• Current assets and current liabilities include three accounts which are of special
importance: accounts receivable, accounts payable and inventories.
• The goal of working capital management is to ensure that the firm is able to
continue its operations and that it has sufficient cash flow. The management of
working capital involves managing inventories, accounts receivable and payable,
and cash.
Statement of cash flows
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Liquidity
• Liquidity refers to a business's ability to meet its payment obligations, in terms of
possessing sufficient liquid assets, and to such assets themselves. For assets,
liquidity is an asset's ability to be sold without causing a significant movement in
the price and with minimum loss of value.
• A standard company balance sheet has three parts: assets, liabilities and
ownership equity. The main categories of assets are usually listed first, typically in
order of liquidity.
• For a corporation with a published balance sheet there are various ratios used to
calculate a measure of liquidity, namely the current ratio, the quick ratio, the
operating cash flow ratio, and the liquidity ratio (acid test).
Liquidity
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Debt to Equity
• The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion
of shareholders' equity and debt used to finance a company's assets. Closely
related to leveraging, the ratio is also known as risk, gearing or leverage.
• Preferred stocks can be considered part of debt or equity. Attributing preferred
shares to one or the other is partially a subjective decision.
• The formula of debt/ equity ratio: D/E = Debt (liabilities) / equity = Debt / (Assets –
Debt) = (Assets – Equity) / Equity.
Leverage Ratios of Investment Banks
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Market Value vs. Book Value
• Market value is the price at which an asset would trade in a competitive auction
setting.
• Book value or carrying value is the value of an asset according to its balance
sheet account balance. For assets, the value is based on the original cost of the
asset less any depreciation, amortization or impairment costs made against the
asset.
• In many cases, the carrying value of an asset and its market value will differ
greatly. However, they are interrelated.
Depreciation methods which are essential in
calculating book value
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Financial Statements, Taxes, and Cash Flow > The Balance Sheet
Limitations of the Balance Sheet
• Balance sheets do not show true value of assets. Historical cost is criticized for its
inaccuracy since it may not reflect current market valuation.
• Some of the current assets are valued on an estimated basis, so the balance
sheet is not in a position to reflect the true financial position of the business.
• The balance sheet can not reflect those assets which cannot be expressed in
monetary terms, such as skill, intelligence, honesty, and loyalty of workers.
Four depreciation methods
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Financial Statements, Taxes, and Cash Flow > Tax Considerations
Tax Considerations
• Corporate Taxes
• Tax Deductions
• Depreciation
• Individual Taxes
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Financial Statements, Taxes, and Cash Flow > Tax Considerations
Corporate Taxes
• Legal forms of corporations include sole proprietorships, partnerships, C
corporations, S corporations, and LLCs.
• The type of corporation chosen will determine such factors as liability and taxation
on the entity.
• Taxable income for a corporation is defined as all gross income (sales plus other
income minus cost of goods sold and tax exempt income) less allowable tax
deductions and tax credits.
US Corporate Tax Rates
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Financial Statements, Taxes, and Cash Flow > Tax Considerations
Tax Deductions
• Business expenses are those that are incurred in order to generate profit for a
company, such as cost of goods sold.
• Ordinary expenses, such as interest paid on debt, are typically deductible as long
as they are appropriate to the nature of the business, the sort expected to help
produce income, and are not lavish and extravagant.
• In a progressive tax system, the marginal tax rate must be used in order to
calculate the after-tax cost of a deductible expense.
• While a deduction is a reduction of the level of taxable income, a tax credit is a
sum deducted from the total amount of tax owed.
Marginal Income Tax Rates
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Financial Statements, Taxes, and Cash Flow > Tax Considerations
Depreciation
• To determine depreciation expense, the useful life of an asset under depreciation
is estimated in time-units. Then the corresponding depreciation rate is calculated
that will extinguish the value of the asset from the books when the estimated
useful life ends.
• The straight-line method of depreciation reduces the book value of an asset by
the same amount each period.
• The declining balance method of depreciation provides for a higher depreciation
expense in the first year of an asset's life and gradually decreases expenses in
subsequent years.
Straight-Line Depreciation
• Activity depreciation methods are not based on time but on a level of activity, such
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as miles driven or cycle counts.
• Depreciation allows a company to properly identify the amount of income it
generates in a given period.
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Financial Statements, Taxes, and Cash Flow > Tax Considerations
Individual Taxes
• A direct tax is one imposed upon an individual person or on property, as opposed
to an indirect tax that is imposed upon a transaction.
• Income tax is levied on the total income of the individual, less deductions and
credits.
• Sales tax is levied on the state level on retail sale, lease, and rental of many
goods, as well as some services.
• Property tax is levied on interests in real property (land, buildings, and permanent
improvements).
• Estate tax is an excise tax levied on the right to pass property at death.
Federal Tax Receipts
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
The Statement of Cash Flows
• Cash Flow from Operations
• Cash Flow from Investing
• Cash Flow from Financing
• Interpreting Overall Cash Flow
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
Cash Flow from Operations
• Operating cash flows refers to the cash a company generates from the revenues
it brings in, excluding costs associated with long-term investment on capital items
or investment in securities (these are investing or financing activities).
• GAAP and IFRS vary in their categorization of many cash flows, such as paying
dividends. Some activities that are operating cash flows under one system are
financing or investing in another.
• Major operating activities such as manufacturing products or selling a product
may appear on the income statement but not on the cash flow statement,
because cash has not yet changed hands.
US GAAP vs. IFRS Cash Flow Classification
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
Cash Flow from Investing
• Assets included in investment activity include land, buildings, and equipment.
• Receiving dividends from another company's stock is an investing activity,
although paying dividends on a company's own stock is not.
• An investing activity only appears on the cash flow statement if there is an
immediate exchange of cash.
Cash Flow Statement
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
Cash Flow from Financing
• Financing activities can be seen in changes in non-current liabilities and in
changes in equity in the change-in-equity statement.
• A positive financing cash flow could be really great for a company (it just went
issued stock at a great price) or could be due to the company having to take out
loans to stay out of bankruptcy.
• Issuing credit is not a financing activity though taking on credit is. Like all cash
flows, such activities only appear on the cash flow statement when the exchange
of money actually takes place.
NYSE
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
Interpreting Overall Cash Flow
• The three types of cash flow are cash from from operations, investing, and
financing.
• Having positive cash flows is important because it means that the company has at
least some liquidity and may be solvent.
• A positive cash flow does not guarantee that the company can pay all of its bills,
just as a negative cash flow does not mean that it will miss its payments.
• When preparing the statement of cash flows, analysts must focus on changes in
account balances on the balance sheet.
• Cash flows from operating activities are essential to helping analysts assess the
company's ability to meet ongoing funding requirements, contribute to long-term
Cash Flow Comparison
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projects and pay a dividend.
• Analysis of cash flow from investing activities focuses on ratios when assessing a
company's ability to meet future expansion requirements.
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Financial Statements, Taxes, and Cash Flow > The Statement of Cash Flows
• The free cash flow is useful when analysts want to see how much cash can be extracted from a company without causing
issues to its day to day operations.
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Financial Statements, Taxes, and Cash Flow > Other Statements
Other Statements
• The Statement of Equity
• Depreciation
• Free Cash Flow
• MVA and EVA
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Financial Statements, Taxes, and Cash Flow > Other Statements
The Statement of Equity
• The statement breaks down changes in the owners' interest in the organization.
Line items typically include profits or losses from operations, dividends paid, issue
or redemption of stock, and any other items charged or credited to retained
earnings.
• Owners' equity = assets − liabilities.
• The statement of equity uses information from the income statement and provides
information to the balance sheet.
• Ending retained earnings = beginning retained earnings − dividends paid + net
income.
The Statement of Retained Earnings and
Stockholders' Equity
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Financial Statements, Taxes, and Cash Flow > Other Statements
Depreciation
• Depreciation refers to the allocation of the cost of assets to periods in which the
assets are used (depreciation with the matching principle).
• Generally this involves four criteria: cost of the asset, expected salvage value
(residual value of the asset), estimated useful life of the asset, and a method of
apportioning the cost over such life.
• There are several methods for calculating depreciation, generally based on either
the passage of time or the level of activity of the asset: straight-line depreciation,
accelerated depreciation methods, activity depreciation methods, sum-of-years'
digits method, and units-of-production method.
Depreciation
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Financial Statements, Taxes, and Cash Flow > Other Statements
Free Cash Flow
• There are four different methods for calculating free cash flows.
• Free cash flow measures the ease with which businesses can grow and pay
dividends to shareholders.
• Net income and free cash flows are different. Some investors prefer using free
cash flow instead of net income to measure a company's financial performance
because free cash flow is more difficult to manipulate than net income.
Free Cash Flow
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Financial Statements, Taxes, and Cash Flow > Other Statements
MVA and EVA
• Market Value Added (MVA) is the difference between the current market value of
a firm and the capital contributed by investors.
• Economic Value Added or EVA, is an estimate of a firm's economic profit – being
the value created in excess of the required return of the company's investors
(being shareholders and debt holders).
• The firm's market value added, or MVA, is the discounted sum (present value) of
all future expected economic value added: MVA = Present Value of a series of
EVA values.
MVA
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Appendix
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Financial Statements, Taxes, and Cash Flow
Key terms
• amortization The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful
life of the asset.
• amortization The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful
life of the asset.
• amortization The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful
life of the asset.
• amortize To wipe out (a debt, liability etc. ) gradually or in installments.
• Assets economic resources that represent value of ownership that can be converted into cash (although cash itself is also
considered an asset)
• audit an audit of financial statements is the verification of the financial statements of a legal entity intended to enhance the
degree of confidence of intended users in the financial statements by providing reasonable assurance that the financial
statements are presented fairly.
• capital expenditure Funds spent by a company to acquire or upgrade a long-term asset.
• capital gains Profit that results from a disposition of a capital asset, such as stock, bond, or real estate due to arbitrage.
• carrying value In accounting, book value or carrying value is the value of an asset according to its balance sheet account
balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or Impairment costs
made against the asset.
• cash equivalents A deferred expense or prepayment, prepaid expense, plural often prepaids, is an asset representing cash
paid out to a counterpart for goods or services to be received in a later accounting period.
• cash flow The sum of cash revenues and expenditures over a period of time.
• corporate governance involves the roles and relationships between a company's management, its board, its shareholders and
other stakeholders, and the goals for which the corporation is governed. Much of the contemporary interest in corporate
governance is concerned with mitigation of the conflicts of interests and the nature and extent of accountability of people in the
business.
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Financial Statements, Taxes, and Cash Flow
• deferred Of or pertaining to a value that is not realized until a future date, e.g. annuities, charges, taxes, income, either as an
asset or liability.
• deficit the amount by which spending exceeds revenue
• depreciation The measurement of the decline in value of assets. Not to be confused with impairment, which is the
measurement of the unplanned, extraordinary decline in value of assets.
• equity The residual claim or interest to investors in assets after all liabilities are paid. If liability exceeds assets, negative equity
exists and can be purchased through stock.
• fair market value An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured
buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market. An estimate of fair market value
may be founded either on precedent or extrapolation but is subjective. Fair market value differs from other ways of determining
value, such as intrinsic and imposed value.
• FIFO Method for for accounting for inventories. FIFO stands for first-in, first-out, and assumes that the oldest inventory items
are recorded as sold first.
• filing status A status defining the type of tax return form an individual will use, which is based on marital status and family
situation.
• financial analysis Financial analysis (also referred to as financial statement analysis) refers to an assessment of the viability,
stability, and profitability of an organization or project.
• financing A transaction that provides funds for a business.
• financing activities actions where money is flowing between the company and investors in the company, such as banks and
shareholders
• Fixed assets Fixed assets, also known as non-current assets or property, plant, and equipment (PP&E), is a term used in
accounting for assets and property that cannot easily be converted into cash. This can be compared with current assets, such
as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed.
• free cash flow net income plus depreciation and amortization, less changes in working capital, less capital expenditure
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Financial Statements, Taxes, and Cash Flow
• GAAP Generally Accepted Accounting Principles refer to the standard framework of guidelines, conventions, and rules
accountants are expected to follow in recording, summarizing, and preparing financial statements in any given jurisdiction.
• GAAP Generally Accepted Accounting Principles refer to the standard framework of guidelines, conventions, and rules
accountants are expected to follow in recording, summarizing, and preparing financial statements in any given jurisdiction.
• gross profit The difference between net sales and the cost of goods sold.
• IFRS International Financial Reporting Standards. The major accounting standards system used outside of the United States.
• income bond a debt instrument where coupon payments are only made if the issuer can afford it
• income statement a calculation which shows the profit or loss of an accounting unit during a specific period of time, providing a
summary of how the profit or loss is calculated from gross revenue and expenses
• investing activities actions where money is put into something with the expectation of gain, usually over a longer term
• investing activity An activity that causes changes in non-current assets or involves a return on investment.
• jurisdiction the limits or territory within which authority may be exercised
• leverage The use of borrowed funds with a contractually determined return to increase the ability of a business to invest and
earn an expected higher return (usually at high risk).
• liabilities an obligation of an entity arising from past transactions or events, including any type of borrowing
• LIFO Method for accounting for inventory. LIFO stands for last-in, first-out, and assumes that the most recently produced items
are recorded as sold first.
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Financial Statements, Taxes, and Cash Flow
• liquidity Availability of cash over short term: ability to service short-term debt.
• liquidity ratio measurement of the availability of cash to pay debt
• matching principle According to the principle, expenses are recognized when obligations are (1) incurred (usually when goods
are transferred or services rendered, e.g. sold), and (2) offset against recognized revenues, which were generated from those
expenses, no matter when cash is paid out. In cash accounting—in contrast—expenses are recognized when cash is paid out.
• merger The legal union of two or more corporations into a single entity, typically assets and liabilities being assumed by the
buying party.
• net income Gross profit minus operating expenses and taxes.
• net working capital current assets minus current liabilities
• NOPAT NOPAT (net operating profit after tax) is profits derived from a company's operations after cash taxes but before
financing costs and non-cash bookkeeping entries. It is the total pool of profits available to provide a cash return to those who
provide capital to the firm.
• obsolescence The state of being obsolete—no longer in use; gone into disuse; disused or neglected.
• operating liquidity The ability of a company or individual to quickly convert assets to cash for the purpose of paying operating
expenses.
• Preferred Stock Stock with a dividend, usually fixed, that is paid out of profits before any dividend can be paid on common
stock. It also has priority to common stock in liquidation.
• purchase return merchandise given back to the seller from the buyer after the sale in return for a refund
• retained earnings The portion of net income that is retained by the corporation rather than distributed to its owners as
dividends.
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Financial Statements, Taxes, and Cash Flow
• salvage value The estimated value of an asset at the end of its useful life.
• salvage value The estimated value of an asset at the end of its useful life.
• statement of cash flows a financial document that shows how changes in balance sheet accounts and income affect cash and
cash equivalents, and breaks the analysis down to operating, investing, and financing activities
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Financial Statements, Taxes, and Cash Flow
Statement of cash flows
The management of working capital involves managing inventories, accounts receivable and payable, and cash.
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Financial Statements, Taxes, and Cash Flow
Sales Tax Rates
This graph shows the effective sales tax rates for the 50 states.
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Financial Statements, Taxes, and Cash Flow
Depreciation methods which are essential in calculating book value
4 Depreciation methods (1. Straight-Line method, (2. Double-Declining Balance method, (3. Sum-of-the-Years' Digits method, (4.Productive output
method)
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Financial Statements, Taxes, and Cash Flow
Balance Sheet
Sample Domestic Balance Sheet (DBS) to be referenced by Domestic Well-Being Accounting (DWBA)
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Financial Statements, Taxes, and Cash Flow
Machinery
Machinery is an example of a noncash asset.
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Financial Statements, Taxes, and Cash Flow
MVA
Calculation of MVA
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Financial Statements, Taxes, and Cash Flow
Cash Flow Comparison
Company B has a higher yearly cash flow. However, Company A is actually earning more cash by its core activities and has already spent 45 million
dollars in long-term investments, of which revenues will show up after three years.
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Financial Statements, Taxes, and Cash Flow
Depreciation
This is the units-of-production method for calculating depreciation.
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Financial Statements, Taxes, and Cash Flow
NYSE
The cash from issuing stocks in a market such as the New York Stock Exchange is positive financing cash flow.
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Financial Statements, Taxes, and Cash Flow
A Sample Income Statement
Expenses are listed on a company's income statement.
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Financial Statements, Taxes, and Cash Flow
MVA and EVA
MVA is the present value of a series of EVA values.
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Financial Statements, Taxes, and Cash Flow
Four depreciation methods
Different methods of depreciation affect the carrying value of an asset on balance sheets.
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Financial Statements, Taxes, and Cash Flow
Depreciation
This is the formula used to calculate straight-line depreciation.
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Financial Statements, Taxes, and Cash Flow
Consolidated financial statements
Financial statements can include a number of inaccuracies and limitations that affect the way a company can be viewed.
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Financial Statements, Taxes, and Cash Flow
Keeping Money Organized
Financial Statements help keep money organized.
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Financial Statements, Taxes, and Cash Flow
Budget
One of the uses of financial statements is as a budgeting tool, as in this example.
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Financial Statements, Taxes, and Cash Flow
Income statement
GAAP and IRS accounting can differ.
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Financial Statements, Taxes, and Cash Flow
Income statement
Accounting for inventory can be done in different ways, leading to differences in statements.
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Financial Statements, Taxes, and Cash Flow
Liquidity
Monthly liquidity of an organic vegetable business
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Financial Statements, Taxes, and Cash Flow
Total Effective Tax Rates
This graph shows the total effective tax rates for each earning class in 2011.
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Financial Statements, Taxes, and Cash Flow
Cash Flow Statement
Example of cash flow statement (indirect method)
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Financial Statements, Taxes, and Cash Flow
Leverage Ratios of Investment Banks
Each of the five largest investment banks took on greater risk leading up to the subprime crisis. This is summarized by their leverage ratio, which is the
ratio of total debt to total equity. A higher ratio indicates more risk.
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Financial Statements, Taxes, and Cash Flow
US Corporate Tax Rates
This graph shows the effect of corporate tax rates in the U.S. from 1947 through 2012.
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Financial Statements, Taxes, and Cash Flow
US GAAP vs. IFRS Cash Flow Classification
Some transactions may be classified as different types of cash flows under GAAP and IFRS accounting standards.
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Financial Statements, Taxes, and Cash Flow
Federal Tax Receipts
This chart depicts the level of tax received by the United States federal government from each source in 2010.
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Financial Statements, Taxes, and Cash Flow
Accounting equation
Assets = Liabilities + Owner's Equity
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Financial Statements, Taxes, and Cash Flow
Free Cash Flow
An example of calculating free cash flow.
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Financial Statements, Taxes, and Cash Flow
Straight-Line Depreciation
Annual depreciation expense is equal to the original cost of the asset minus its salvage value, divided by the useful life of the asset.
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Financial Statements, Taxes, and Cash Flow
Marginal Income Tax Rates
This graph plots the marginal income tax rates for the top tax bracket in the US from 1913 to 2009.
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Financial Statements, Taxes, and Cash Flow
The Statement of Retained Earnings and Stockholders' Equity
The statement of retained earnings uses information from the income statement and provides information to the balance sheet.
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Financial Statements, Taxes, and Cash Flow
Which of the following best defines financial statements in
general?
A) A listing of a company's assets and liabilities.
B) A detailed report of a company's income and expenses.
C) A collection of reports that describes a company's financial activities to
a third party.
D) An analysis of the flow of cash into and out of a business.
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Financial Statements, Taxes, and Cash Flow
Which of the following best defines financial statements in
general?
A) A listing of a company's assets and liabilities.
B) A detailed report of a company's income and expenses.
C) A collection of reports that describes a company's financial activities to
a third party.
D) An analysis of the flow of cash into and out of a business.
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Financial Statements, Taxes, and Cash Flow
Which of the following can be determined through an analysis of a
company's financial statement?
A) The company's creditworthiness.
B) The accuracy of the company's tax returns.
C) The company's profitability.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Which of the following can be determined through an analysis of a
company's financial statement?
A) The company's creditworthiness.
B) The accuracy of the company's tax returns.
C) The company's profitability.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
There has been a recent push to standardize accounting
standards worldwide. Which limitation of financial statements
does this step address?
A) Cross-time or cross-company comparison of financial statements can
be difficult.
B) Financial statements can be intentionally manipulated to make the
company look better.
C) Financial statements may not provide a complete picture of a
company's economic prospects.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
There has been a recent push to standardize accounting
standards worldwide. Which limitation of financial statements
does this step address?
A) Cross-time or cross-company comparison of financial statements can
be difficult.
B) Financial statements can be intentionally manipulated to make the
company look better.
C) Financial statements may not provide a complete picture of a
company's economic prospects.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Many countries require that a company's financial statements be
audited by an unbiased third party. Which limitation of financial
statements does this requirement address?
A) Financial statements can be intentionally manipulated to make the
company look better.
B) Cross-time or cross-company comparison of financial statements can
be difficult.
C) Financial statements may not provide a complete picture of a
company's economic prospects.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Many countries require that a company's financial statements be
audited by an unbiased third party. Which limitation of financial
statements does this requirement address?
A) Financial statements can be intentionally manipulated to make the
company look better.
B) Cross-time or cross-company comparison of financial statements can
be difficult.
C) Financial statements may not provide a complete picture of a
company's economic prospects.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a step in constructing a multi-step
income statement?
A) Add all revenues, then subtract all expenses.
B) Subtract operating expenses from gross profit to determine income
from operations.
C) Subtract non-operating expenses from income from operations.
D) Subtract income tax expense from income before taxes.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a step in constructing a multi-step
income statement?
A) Add all revenues, then subtract all expenses.
B) Subtract operating expenses from gross profit to determine income
from operations.
C) Subtract non-operating expenses from income from operations.
D) Subtract income tax expense from income before taxes.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a non-operating expense?
A) Depreciation and Amortization
B) Research & Development expenses
C) Selling, General and Administrative Expenses
D) Interest expense
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Financial Statements, Taxes, and Cash Flow
Which of the following is a non-operating expense?
A) Depreciation and Amortization
B) Research & Development expenses
C) Selling, General and Administrative Expenses
D) Interest expense
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Financial Statements, Taxes, and Cash Flow
Which of the following is a limitation associated with income
statements?
A) Items that might be relevant to a company's value cannot be reliably
measured and are not reported.
B) Some figures are based on differing accounting methods.
C) All of these answers
D) Some values are based on judgments and estimates.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a limitation associated with income
statements?
A) Items that might be relevant to a company's value cannot be reliably
measured and are not reported.
B) Some figures are based on differing accounting methods.
C) All of these answers
D) Some values are based on judgments and estimates.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT one of the four basic GAAP
principles?
A) Assets and liabilities should be reported based on acquisition cost.
B) Revenue should be recorded when realized or realizable and when
cash is received.
C) Deciding which information to disclose should be based on a trade-off
analysis.
D) Expenses should be recognized when the product it is associated with
generates recognized revenue.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT one of the four basic GAAP
principles?
A) Assets and liabilities should be reported based on acquisition cost.
B) Revenue should be recorded when realized or realizable and when
cash is received.
C) Deciding which information to disclose should be based on a trade-off
analysis.
D) Expenses should be recognized when the product it is associated with
generates recognized revenue.
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Financial Statements, Taxes, and Cash Flow
Which of the following best summarizes why there may be a
difference between a company's pretax income and taxable
income?
A) The tax code requires full disclosure, GAAP does not.
B) GAAP requires that companies use historical costs, while the tax code
does not.
C) Pretax income is based on revenue recognition; taxable income is
based on the company's cashflow.
D) All of these answers
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Financial Statements, Taxes, and Cash Flow
Which of the following best summarizes why there may be a
difference between a company's pretax income and taxable
income?
A) The tax code requires full disclosure, GAAP does not.
B) GAAP requires that companies use historical costs, while the tax code
does not.
C) Pretax income is based on revenue recognition; taxable income is
based on the company's cashflow.
D) All of these answers
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Financial Statements, Taxes, and Cash Flow
Which of the following is a noncash item that would be included
on the income statement?
A) Depreciation and Amortization
B) Unrealized losses from investments
C) Write down of inventory.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a noncash item that would be included
on the income statement?
A) Depreciation and Amortization
B) Unrealized losses from investments
C) Write down of inventory.
D) All of these answers.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a current asset?
A) Cash
B) Raw material inventory
C) Copyrights
D) Accounts Receivable
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a current asset?
A) Cash
B) Raw material inventory
C) Copyrights
D) Accounts Receivable
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Financial Statements, Taxes, and Cash Flow
Which of the following is the correct order of how assets should
be presented on a balance sheet?
A) Cash; inventory; accounts receivable; property, plant, and equipment
(PPE).
B) Accounts receivable; cash; inventory property, plant, and equipment.
C) Cash; accounts receivable; inventory; property, plant and equipment
(PPE).
D) Cash; inventory; property, plant, and equipment (PPE); accounts
receivable.
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Financial Statements, Taxes, and Cash Flow
Which of the following is the correct order of how assets should
be presented on a balance sheet?
A) Cash; inventory; accounts receivable; property, plant, and equipment
(PPE).
B) Accounts receivable; cash; inventory property, plant, and equipment.
C) Cash; accounts receivable; inventory; property, plant and equipment
(PPE).
D) Cash; inventory; property, plant, and equipment (PPE); accounts
receivable.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a liability that a business must
include on its balance sheet?
A) Wages paid to its employees.
B) A short-term bank loan.
C) Payments received from customers for products the business has not
yet delivered.
D) Money owed to suppliers for goods the business has already received.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a liability that a business must
include on its balance sheet?
A) Wages paid to its employees.
B) A short-term bank loan.
C) Payments received from customers for products the business has not
yet delivered.
D) Money owed to suppliers for goods the business has already received.
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Financial Statements, Taxes, and Cash Flow
Which of the following is the correct definition of the accounting
equation?
A) Owner's Equity = Assets + Liabilities
B) Liabilities = Assets + Owner's Equity
C) Assets = Liabilities + Initial Owner's Equity
D) Assets = Liabilities + Owner's Equity
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Financial Statements, Taxes, and Cash Flow
Which of the following is the correct definition of the accounting
equation?
A) Owner's Equity = Assets + Liabilities
B) Liabilities = Assets + Owner's Equity
C) Assets = Liabilities + Initial Owner's Equity
D) Assets = Liabilities + Owner's Equity
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a type of equity account?
A) Capital Surplus
B) Goodwill
C) Treasury Stock
D) Stock Options
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a type of equity account?
A) Capital Surplus
B) Goodwill
C) Treasury Stock
D) Stock Options
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Financial Statements, Taxes, and Cash Flow
What does it mean when a business has a working capital deficit?
A) The business does not have the resources to pay its debts.
B) The business lacks the current assets to pay its short-term expenses
and liabilities.
C) The business's accounts payable are greater than its accounts
receivable.
D) Inventory levels are too high.
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Financial Statements, Taxes, and Cash Flow
What does it mean when a business has a working capital deficit?
A) The business does not have the resources to pay its debts.
B) The business lacks the current assets to pay its short-term expenses
and liabilities.
C) The business's accounts payable are greater than its accounts
receivable.
D) Inventory levels are too high.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a correct way of calculating a
liquidity ratio?
A) Operating Cash Flow Ratio = Current Liabilities / Operating Cash Flow
B) Current Ratio = Total Current Assets / Total Current Liabilities
C) Quick Ratio = (Current Asset - Inventories - Prepayments) / Current
Liabilities
D) Liquidity Ratio = Liquid Assets / Short-term Liabilities
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a correct way of calculating a
liquidity ratio?
A) Operating Cash Flow Ratio = Current Liabilities / Operating Cash Flow
B) Current Ratio = Total Current Assets / Total Current Liabilities
C) Quick Ratio = (Current Asset - Inventories - Prepayments) / Current
Liabilities
D) Liquidity Ratio = Liquid Assets / Short-term Liabilities
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a way to calculate the debt to equity
ratio?
A) Interest-Bearing Long-Term Debt / Equity
B) Debt / (Assets - Debt)
C) (Assets - Equity) / Debt
D) Debt / (Debt + Equity)
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a way to calculate the debt to equity
ratio?
A) Interest-Bearing Long-Term Debt / Equity
B) Debt / (Assets - Debt)
C) (Assets - Equity) / Debt
D) Debt / (Debt + Equity)
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT information used to calculate an
asset's book value?
A) The total amount of depreciation, amortization, and impairment costs
made against the asset.
B) The price of the asset when it was acquired.
C) The costs associated with originally acquiring the asset, such as
broker fees.
D) The current market price of the asset.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT information used to calculate an
asset's book value?
A) The total amount of depreciation, amortization, and impairment costs
made against the asset.
B) The price of the asset when it was acquired.
C) The costs associated with originally acquiring the asset, such as
broker fees.
D) The current market price of the asset.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a limitation associated with using a
balance sheet?
A) The value of some assets listed on the balance sheets are estimates,
not the true financial value.
B) Some assets, such as the loyalty of the business's workers, are not
included on the balance sheet.
C) All of these answers.
D) Assets are recorded at their historical cost, not their current market
value.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a limitation associated with using a
balance sheet?
A) The value of some assets listed on the balance sheets are estimates,
not the true financial value.
B) Some assets, such as the loyalty of the business's workers, are not
included on the balance sheet.
C) All of these answers.
D) Assets are recorded at their historical cost, not their current market
value.
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Financial Statements, Taxes, and Cash Flow
The balance sheet is the only financial statement which ____
A) applies to a single point in time of a business's calendar year.
B) uses estimates.
C) uses historical data.
D) must conform to accounting standards.
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Financial Statements, Taxes, and Cash Flow
The balance sheet is the only financial statement which ____
A) applies to a single point in time of a business's calendar year.
B) uses estimates.
C) uses historical data.
D) must conform to accounting standards.
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Financial Statements, Taxes, and Cash Flow
Which of the following types of business association is taxed as a
separate entity from its shareholders?
A) S Corporation
B) Partnership
C) Sole Proprietorship
D) C Corporation
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Financial Statements, Taxes, and Cash Flow
Which of the following types of business association is taxed as a
separate entity from its shareholders?
A) S Corporation
B) Partnership
C) Sole Proprietorship
D) C Corporation
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a deduction associated with
carrying on a trade or business?
A) Cost of goods sold
B) Interest paid on debt
C) Incurred expenses that are ordinary and necessary for the conduct of
the business.
D) A loss on a sale of an income producing asset.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a deduction associated with
carrying on a trade or business?
A) Cost of goods sold
B) Interest paid on debt
C) Incurred expenses that are ordinary and necessary for the conduct of
the business.
D) A loss on a sale of an income producing asset.
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Financial Statements, Taxes, and Cash Flow
Which of the following statements regarding the declining balance
method of depreciation is true?
A) It is calculated based on level of activity.
B) It has a higher depreciation expense in the asset's first year, which
decrease over time.
C) It is the simplest method to calculate depreciation.
D) All of these answers
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Financial Statements, Taxes, and Cash Flow
Which of the following statements regarding the declining balance
method of depreciation is true?
A) It is calculated based on level of activity.
B) It has a higher depreciation expense in the asset's first year, which
decrease over time.
C) It is the simplest method to calculate depreciation.
D) All of these answers
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a correct definition of an individual
tax?
A) The property tax is a state tax imposed on ownership of real property
based on its acquisition cost.
B) The gift tax is imposed on individuals who transfer property to others
for less than adequate value.
C) Payroll taxes are imposed on employers and employees based on the
employees' compensation
D) Sales tax is an indirect tax on retail sales, lease and rental of goods,
as well as some services.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a correct definition of an individual
tax?
A) The property tax is a state tax imposed on ownership of real property
based on its acquisition cost.
B) The gift tax is imposed on individuals who transfer property to others
for less than adequate value.
C) Payroll taxes are imposed on employers and employees based on the
employees' compensation
D) Sales tax is an indirect tax on retail sales, lease and rental of goods,
as well as some services.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT an event that would affect the
operating section of a company's cash flow statement?
A) Paying interest on debt owed by the company.
B) Receiving cash payment from the sale of the business's goods.
C) Paying down the principal of debt owed by the company.
D) Paying employee wages.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT an event that would affect the
operating section of a company's cash flow statement?
A) Paying interest on debt owed by the company.
B) Receiving cash payment from the sale of the business's goods.
C) Paying down the principal of debt owed by the company.
D) Paying employee wages.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT an event that would be included in
the investing section of a company's cash flow statement?
A) Paying interest to an investor who holds the company's debt.
B) Selling some of the company's land.
C) Purchasing a new subsidiary with cash.
D) Receiving interest payments for debt owed to the company.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT an event that would be included in
the investing section of a company's cash flow statement?
A) Paying interest to an investor who holds the company's debt.
B) Selling some of the company's land.
C) Purchasing a new subsidiary with cash.
D) Receiving interest payments for debt owed to the company.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a financing activity that would impact a
company's cash flow statement?
A) The company makes a sale on credit to a customer.
B) The company issues a discount on the sale of some of its products.
C) Company took out a loan from a bank.
D) The company makes a loan to one of its employees.
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Financial Statements, Taxes, and Cash Flow
Which of the following is a financing activity that would impact a
company's cash flow statement?
A) The company makes a sale on credit to a customer.
B) The company issues a discount on the sale of some of its products.
C) Company took out a loan from a bank.
D) The company makes a loan to one of its employees.
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a component of the Cash Flow
Statement?
A) Cash Flow from Operations
B) Cash Flow from Sales
C) Cash Flow from Investing
D) Cash Flow from Financing
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Financial Statements, Taxes, and Cash Flow
Which of the following is NOT a component of the Cash Flow
Statement?
A) Cash Flow from Operations
B) Cash Flow from Sales
C) Cash Flow from Investing
D) Cash Flow from Financing
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Financial Statements, Taxes, and Cash Flow
Which of the following does NOT describe the purpose of a Cash
Flow Statement?
A) It demonstrates whether a company is profitable.
B) It shows whether a company will be able to pay its bills and make the
necessary investments.
C) It breaks down how a company brings in cash.
D) It shows whether a company has a positive or negative cash flow.
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Financial Statements, Taxes, and Cash Flow
Which of the following does NOT describe the purpose of a Cash
Flow Statement?
A) It demonstrates whether a company is profitable.
B) It shows whether a company will be able to pay its bills and make the
necessary investments.
C) It breaks down how a company brings in cash.
D) It shows whether a company has a positive or negative cash flow.
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Financial Statements, Taxes, and Cash Flow
The sum of cash revenues and expenditures over a period of
time.
A) Cash
B) Assets
C) Cash Flow
D) Account Receivables
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Financial Statements, Taxes, and Cash Flow
The sum of cash revenues and expenditures over a period of
time.
A) Cash
B) Assets
C) Cash Flow
D) Account Receivables
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Financial Statements, Taxes, and Cash Flow
Which of the following transactions would be a financing activity
on the statement of cash flows?
A) interest paid on convertible bonds
B) interest received
C) purchase of equipment financed by convertible bonds
D) purchase of treasury stock
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Financial Statements, Taxes, and Cash Flow
Which of the following transactions would be a financing activity
on the statement of cash flows?
A) interest paid on convertible bonds
B) interest received
C) purchase of equipment financed by convertible bonds
D) purchase of treasury stock
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Financial Statements, Taxes, and Cash Flow
Which of the following is not included in a company's statement of
equity?
A) Dividends paid
B) Profits/losses from opoerations
C) Redemption of Stock
D) Goodwill
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Financial Statements, Taxes, and Cash Flow
Which of the following is not included in a company's statement of
equity?
A) Dividends paid
B) Profits/losses from opoerations
C) Redemption of Stock
D) Goodwill
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Financial Statements, Taxes, and Cash Flow
A company's retained earnings at the beginning of the year is $1
million. It paid $100,000 in dividends, had $250,000 in net income,
and its goodwill increased by $10,000. What is its retained
earnings as of the end of the year?
A) $1,160,00
B) $1,150,000
C) $1,250,000
D) $1,260,000
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Financial Statements, Taxes, and Cash Flow
A company's retained earnings at the beginning of the year is $1
million. It paid $100,000 in dividends, had $250,000 in net income,
and its goodwill increased by $10,000. What is its retained
earnings as of the end of the year?
A) $1,160,00
B) $1,150,000
C) $1,250,000
D) $1,260,000
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Financial Statements, Taxes, and Cash Flow
Which of the following is a correct way to calculate depreciation
expense?
A) All of these answers
B) Straight-line = (acquisition cost - salvage value) / number of years of
the asset's useful life
C) Activity depreciation = (acquisition cost - salvage value) / unit of
activity (e.g. miles driven)
D) Accelerated Depreciation = Depreciation Rate * Book Value at
Beginning of Year
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Financial Statements, Taxes, and Cash Flow
Which of the following is a correct way to calculate depreciation
expense?
A) All of these answers
B) Straight-line = (acquisition cost - salvage value) / number of years of
the asset's useful life
C) Activity depreciation = (acquisition cost - salvage value) / unit of
activity (e.g. miles driven)
D) Accelerated Depreciation = Depreciation Rate * Book Value at
Beginning of Year
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Financial Statements, Taxes, and Cash Flow
A company had an after tax profit of $1,500,000. Its debt to equity
ratio was 0.5. It had $200,000 in capital expenditures for the year
and a $100,000 increase in working capital. It had $250,000 in
depreciation expenses. What is its free cash flow?
A) $1,400,000
B) $1,225,000
C) $1,275,000
D) $1,150,000
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Financial Statements, Taxes, and Cash Flow
A company had an after tax profit of $1,500,000. Its debt to equity
ratio was 0.5. It had $200,000 in capital expenditures for the year
and a $100,000 increase in working capital. It had $250,000 in
depreciation expenses. What is its free cash flow?
A) $1,400,000
B) $1,225,000
C) $1,275,000
D) $1,150,000
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Financial Statements, Taxes, and Cash Flow
A company has earnings before income tax of $2 million and a
15% tax rate. It had $250,000 in depreciation expenses with a
$50,000 increase in working capital. It had another $100,00 in
capital expenditures. What is its free cash flow.
A) $1,800,000
B) $1,700,000
C) $1,950,000
D) $1,850,000
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Financial Statements, Taxes, and Cash Flow
A company has earnings before income tax of $2 million and a
15% tax rate. It had $250,000 in depreciation expenses with a
$50,000 increase in working capital. It had another $100,00 in
capital expenditures. What is its free cash flow.
A) $1,800,000
B) $1,700,000
C) $1,950,000
D) $1,850,000
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Financial Statements, Taxes, and Cash Flow
When is a business a good investment based on the Market Value
Added (MVA) metric?
A) The MVA is greater than what the investors could have received by
investing in the market portfolio.
B) MVA is positive.
C) MVA exceeds the investors' initial investment.
D) MVA is greater than the business's net operating profit after taxes.
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Financial Statements, Taxes, and Cash Flow
When is a business a good investment based on the Market Value
Added (MVA) metric?
A) The MVA is greater than what the investors could have received by
investing in the market portfolio.
B) MVA is positive.
C) MVA exceeds the investors' initial investment.
D) MVA is greater than the business's net operating profit after taxes.
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Financial Statements, Taxes, and Cash Flow
Assume a businesses's return on investment capital is 8%,its
weighted average cost of capital is 4%, and its economic capital
employed is $1,000,000. What is its EVA?
A) $400,000
B) $40,000
C) $120,000
D) $60,000
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Financial Statements, Taxes, and Cash Flow
Assume a businesses's return on investment capital is 8%,its
weighted average cost of capital is 4%, and its economic capital
employed is $1,000,000. What is its EVA?
A) $400,000
B) $40,000
C) $120,000
D) $60,000
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Financial Statements, Taxes, and Cash Flow
Attribution
• Wikipedia. "Financial statement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Financial_statement
• Wiktionary. "equity." CC BY-SA 3.0 http://en.wiktionary.org/wiki/equity
• Wiktionary. "liabilities." CC BY-SA 3.0 http://en.wiktionary.org/wiki/liabilities
• Wikipedia. "Assets." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Assets
• Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/financial-analysis
• Wiktionary. "deferred." CC BY-SA 3.0 http://en.wiktionary.org/wiki/deferred
• Wiktionary. "fair market value." CC BY-SA 3.0 http://en.wiktionary.org/wiki/fair+market+value
• Wikipedia. "Cash Flow." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_Flow
• Wikipedia. "Operating cash flow." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Operating_cash_flow
• Wikipedia. "Cash flow statement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_flow_statement#Indirect_method
• Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/ifrs
• Wiktionary. "GAAP." CC BY-SA 3.0 http://en.wiktionary.org/wiki/GAAP
• Wikipedia. "Tax rate." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Tax_rate#Marginal
• Wikipedia. "Corporate taxes." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Corporate_taxes
• Wiktionary. "deduction." CC BY-SA http://en.wiktionary.org/wiki/deduction
• Wikipedia. "Tax deductions." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Tax_deductions
• Wikipedia. "Gross income." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Gross_income
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Financial Statements, Taxes, and Cash Flow
• Wikipedia. "Tax rate." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Tax_rate#Marginal
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Financial Statements, Taxes, and Cash Flow
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Financial Statements, Taxes, and Cash Flow
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Financial Statements, Taxes, and Cash Flow
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