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MGAB01H3 Lecture Notes - Lecture 1: Accounts Receivable, Income Statement, Retained Earnings

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School
UTSC
Department
Financial Accounting
Course
MGAB01H3
Professor
G.Quan Fun

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MGAB01H3 Full Course Notes
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MGAB01H3 Full Course Notes
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Document Summary

Start with the basic equation: a = l + se. Itemized each component of a = l + se. A = cash + short term investment + current asset + long term asset + long term investment. L = + current liabilities (excluding short term portion of long term liabilities) + long term liabilities (including short term portion of long term liabilities) Se = + share capital + revenue expenses dividends. Since all cash transactions eventually affect the non-cash balance sheet accounts, the nature of the cash flow can be determined by examining those non- cash accounts. Cash = - short term investment - current asset - long term asset - long term investment + current liabilities + long term liabilities + share capital + revenue expenses dividends. Cash = - short term investment - current asset - long term asset - Long term investment + current liabilities + long term liabilities + Share capital + revenue expenses dividends.

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Related Questions

Using the 2005 and 2006 Statement of Financial Position (SFP) and the Statement of Earnings (SE) found on pages 465 and 466, complete a vertical analysis (common-sized statements) for both years and a horizontal analysis (trend) from 2005 to 2006.Please show work.......thanks

Table13:1

Bayside Memorial Hospital Statements of Operations (Income Statements) Years Ended December 31, 2006 and 2005 (Thousands of dollars 2006 2005

Net Patient Service Revenue $108,600 $97,393

Premium revenue 5,232 4,622

Other revenue $ 3,644 6,014

Total revenues $117,476 $108,029

Expense:

Nursing Services $58,245 56,752

Dietary Services 5,424 4,718

General services 13,198 11,655

Administrative services 11,427 11,585

Employee health and welfare 10,250 10,705

Provision for uncollectible 3,328 3,469

Provision for malpractice 1,320 1,204

Depreciation 4,130 4,025

Interest expense 1,542 1,521

Total Expense $108,904 $105,634

Net Income $8,572 $2,395

Balance Sheet

Table 13.2 contains Bay side’s 2005 and 2006 balance sheets. Although the assets are all stated in terms of dollars, only cash represents actual money we see that bayside can if it liquidated its short-term investment securities. Write checks at the end of 2006 for a total $6,263,000 (verse total current liabilities of $13,332,000 due during 2006). The noncash current assets will presumably be converted to cash within a year, but they do not represent cash on hand.

Then Claims against assets are two types: 1) liabilities, or money the firm owes, and 2) equity, also called net assets or fund capital. Equity is a residual, so for 2006

Assets -Liabilities = Equity

151,278,000 - ($13,332,000+$30,582,000) =$107,364,000

Liabilities consist of $(13,332,000 of current liabilities plus $30,582,000of long-term liabilities. If assets decline in value-suppose some of Bayside’ s fixed assets were sold at less that book value-liabilities remain constant, so the value of the equity capital declines.

Table 13:2 Bayside Memorial Hospital Balance Sheets December 31, 2006 and 2005 (thousand of dollars)

2006 2005

Cash $4,263 $5,095

Short-term investments 2,000 0

Accounts receivable 21,840 20,738

Inventories 3,177 2,982

Total current assets $31,280 $28,815

Gross plant and equipment $145,168 $140,865

Accumulated depreciations 25,160 21,030

Net plant and equipment $119,998 $119,835

Total assets $151,278 $148,650

Accounts payable $4,707 $5,145

Accrued expenses 5,650 5,421

Notes payable 825 4,237

Current portion of long-term debt 2,150 2,000

Total current liabilities $13,332 $16,803

Long-term debt $28,750 $30,900

Capital lease obligations 1,832 2,155

Total long-term liabilities $30,582 $33,055

Net assets (equity) $107,364 $98,792

Total liabilities and net assets $151,278 $148,650

What are the Balance Sheet Ratios (debt-to-asset and debt-to-equity ratios) for the following financial information for 2015 and 2016? (PLEASE SHOW WORK SO I CAN UNDERSTAND HOW THIS WAS DONE. Thank you)

AMAZON.COM INC (AMZN) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12
Revenue 107006 135987
Cost of revenue 71651 88265
Gross profit 35355 47722
Operating expenses
Sales, General and administrative 20411 27284
Other operating expenses 12711 16252
Total operating expenses 33122 43536
Operating income 2233 4186
Interest Expense 459 484
Other income (expense) -206 190
Income before income taxes 1568 3892
Provision for income taxes 950 1425
Other income -22 -96
Net income from continuing operations 596 2371
Net income 596 2371
Net income available to common shareholders 596 2371
Earnings per share
Basic 1.28 5.01
Diluted 1.25 4.9
Weighted average shares outstanding
Basic 467 474
Diluted 477 484
EBITDA 8308 12492
AMAZON.COM INC (AMZN) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12
Assets
Current assets
Cash
Cash and cash equivalents 15890 19334
Short-term investments 3918 6647
Total cash 19808 25981
Receivables 6423 8339
Inventories 10243 11461
Deferred income taxes
Total current assets 36474 45781
Non-current assets
Property, plant and equipment
Land 9770 13998
Fixtures and equipment 18417 25989
Other properties 1866 2454
Property and equipment, at cost 30053 42441
Accumulated Depreciation -8215 -13327
Property, plant and equipment, net 21838 29114
Goodwill 3759 3784
Intangible assets
Deferred income taxes 1084
Other long-term assets 2289 4723
Total non-current assets 28970 37621
Total assets 65444 83402
Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable 20397 25309
Accrued liabilities 10384 13739
Deferred revenues 3118 4768
Total current liabilities 33899 43816
Non-current liabilities
Long-term debt 8235 7694
Capital leases 5948 7519
Deferred taxes liabilities 392
Other long-term liabilities 3978 4696
Total non-current liabilities 18161 20301
Total liabilities 52060 64117
Stockholders' equity
Common stock 5 5
Additional paid-in capital 13394 17186
Retained earnings 2545 4916
Treasury stock -1837 -1837
Accumulated other comprehensive income -723 -985
Total stockholders' equity 13384 19285
Total liabilities and stockholders' equity 65444 83402
AMAZON.COM INC (AMZN) Statement of CASH FLOW
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12
Cash Flows From Operating Activities
Net income 596 2371
Depreciation & amortization 6281 8116
Investments losses (gains) 5
Deferred income taxes 81 -246
Stock based compensation 2119 2975
Accounts receivable -1755 -3367
Inventory -2187 -1426
Accounts payable 4294 5030
Accrued liabilities 913 1724
Other working capital 1292 1955
Other non-cash items 281 -689
Net cash provided by operating activities 11920 16443
Cash Flows From Investing Activities
Investments in property, plant, and equipment -4589 -6737
Acquisitions, net -795 -116
Purchases of investments -4091 -7756
Sales/Maturities of investments 3025 4733
Net cash used for investing activities -6450 -9876
Cash Flows From Financing Activities
Long-term debt issued 353 621
Long-term debt repayment -4235 -4361
Excess tax benefit from stock based compensation 119 829
Repurchases of treasury stock
Net cash provided by (used for) financing activities -3763 -2911
Effect of exchange rate changes -374 -212
Net change in cash 1333 3444
Cash at beginning of period 14557 15890
Cash at end of period 15890 19334
Free Cash Flow
Operating cash flow 11920 16443
Capital expenditure -4589 -6737
Free cash flow 7331 9706
Supplemental schedule of cash flow data
Cash paid for income taxes 273 412
Cash paid for interest 478 496

What is the return on Invested Capital (ROIC) for the 2015 and 2016 financial data? Please show work. Thank you very much.

AMAZON.COM INC (AMZN) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12

Revenue

 107006 135987
Cost of revenue 71651 88265
Gross profit 35355 47722
Operating expenses
Sales, General and administrative 20411 27284
Other operating expenses 12711 16252
Total operating expenses 33122 43536
Operating income 2233 4186
Interest Expense 459 484
Other income (expense) -206 190
Income before income taxes 1568 3892
Provision for income taxes 950 1425
Other income -22 -96
Net income from continuing operations 596 2371
Net income 596 2371
Net income available to common shareholders 596 2371
Earnings per share
Basic 1.28 5.01
Diluted 1.25 4.9
Weighted average shares outstanding
Basic 467 474
Diluted 477 484
EBITDA 8308 12492
AMAZON.COM INC (AMZN) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12
Assets
Current assets
Cash
Cash and cash equivalents 15890 19334
Short-term investments 3918 6647
Total cash 19808 25981
Receivables 6423 8339
Inventories 10243 11461
Deferred income taxes
Total current assets 36474 45781
Non-current assets
Property, plant and equipment
Land 9770 13998
Fixtures and equipment 18417 25989
Other properties 1866 2454
Property and equipment, at cost 30053 42441
Accumulated Depreciation -8215 -13327
Property, plant and equipment, net 21838 29114
Goodwill 3759 3784
Intangible assets
Deferred income taxes 1084
Other long-term assets 2289 4723
Total non-current assets 28970 37621
Total assets 65444 83402
Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable 20397 25309
Accrued liabilities 10384 13739
Deferred revenues 3118 4768
Total current liabilities 33899 43816
Non-current liabilities
Long-term debt 8235 7694
Capital leases 5948 7519
Deferred taxes liabilities 392
Other long-term liabilities 3978 4696
Total non-current liabilities 18161 20301
Total liabilities 52060 64117
Stockholders' equity
Common stock 5 5
Additional paid-in capital 13394 17186
Retained earnings 2545 4916
Treasury stock -1837 -1837
Accumulated other comprehensive income -723 -985
Total stockholders' equity 13384 19285
Total liabilities and stockholders' equity 65444 83402
AMAZON.COM INC (AMZN) Statement of CASH FLOW
Fiscal year ends in December. USD in millions except per share data. 2015-12 2016-12
Cash Flows From Operating Activities
Net income 596 2371
Depreciation & amortization 6281 8116
Investments losses (gains) 5
Deferred income taxes 81 -246
Stock based compensation 2119 2975
Accounts receivable -1755 -3367
Inventory -2187 -1426
Accounts payable 4294 5030
Accrued liabilities 913 1724
Other working capital 1292 1955
Other non-cash items 281 -689
Net cash provided by operating activities 11920 16443
Cash Flows From Investing Activities
Investments in property, plant, and equipment -4589 -6737
Acquisitions, net -795 -116
Purchases of investments -4091 -7756
Sales/Maturities of investments 3025 4733
Net cash used for investing activities -6450 -9876
Cash Flows From Financing Activities
Long-term debt issued 353 621
Long-term debt repayment -4235 -4361
Excess tax benefit from stock based compensation 119 829
Repurchases of treasury stock
Net cash provided by (used for) financing activities -3763 -2911
Effect of exchange rate changes -374 -212
Net change in cash 1333 3444
Cash at beginning of period 14557 15890
Cash at end of period 15890 19334
Free Cash Flow
Operating cash flow 11920 16443
Capital expenditure -4589 -6737
Free cash flow 7331 9706
Supplemental schedule of cash flow data
Cash paid for income taxes 273 412
Cash paid for interest 478 496