BSM 200 Lecture Notes - Lecture 8: Profit Margin, Asset Management, Asset Turnover
22 Feb 2017
School
Department
Course
Professor
Document Summary
Snapshot of the performance of a company at a given period in time. Bala(cid:374)(cid:272)e sheet: s(cid:374)apshot of a (cid:272)o(cid:373)pa(cid:374)y"s assets a(cid:374)d lia(cid:271)ilities at the end of the year: assets = liabilities + ow(cid:374)e(cid:396)"s e(cid:395)uity, assets listed in order of liquidity. Income statement: records how much the company received and how much it spent during the year: sales expenses (variable costs, indirect expenses, and taxes) = Equity finance: have a partner join the company. Profits will have to be shared between partners. Debt finance: acquiring money from the bank (see: loan) Interest will be charged on the loan. Capital structure: subtract interest from earnings if applicable, subtract tax from earnings after interest, divide by equity in dollars. Capital structure decision: deciding whether to use debt or equity: using debt lowers taxes but is more risky since company can go bankrupt if they cannot pay interest charges. Extracting information from a set of financial statements.
