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Lecture 2

FIN 300 Lecture Notes - Lecture 2: Retained Earnings, Income Statement, Valuation Using Multiples


Department
Finance
Course Code
FIN 300
Professor
Laleh Samarbakhsh
Lecture
2

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Session 2
Review Session 1
In-class Sample Problem
Chapter 3
More Problems
1

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2
Recap of Cash Flow
CF Assets= CF Creditors + CF Shareholders
CF Assets = OCF - Net capital spending - Additions to NWC
OCF = Net Income + Dep’n + Interest Paid
Net capital spending =
Net fixed assets End Net fixed assets Beg + Dep’n
Additions to NWC = NWC End NWC Beg
CF Creditors = Interest paid Net new borrowing
CF Shareholders = Dividends paid Net new equity raised
net working capital
Net Working Capital = Current Assets - Current Liability
Net new borrowing = changes in Long-term debt Net new equity = changes in Common Stock

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3
Sources and Uses of Cash
Standardized Financial Statements
Ratio Analysis
Du Pont Identity
Using Financial Statements
Chapter 3
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