FIN501 investment analysis I
CHAPTER 17 PROJECTING CASH FLOW AND EARNINGS
SOURCES OF FINANCIAL INFORMATION
Primary source of financial information about a company is its annual report to stockholders
Other sources include The Globe and Mail, the Toronto Stock Exchange, Ontario Securities Commission
SEDAR: electronic archive of company filings with the Canadian securities regulatory agencies
Disclosure regulation: requires companies making a public disclosure of material non-public information to do so
fairly without preferential recipients
FINANCIAL STATEMENTS
Balance sheet: accounting statement that provides a snapshot view of a company’s assets and liabilities on a
particular date
o Asset: anything a company owns that has value
i. Current assets – cash or items that will be converted to cash or be used within a year (EX.
Cash, AR, inventory, materials and supplies, prepaid expenses)
ii. Fixed assets – tangible or intangible assets with an expected life longer than one year and
are used in normal business operations (EX. Property, plant, equipments, rights, patents, and
licenses)
iii. Investments – various securities held for investment purposes (EX. Common and preferred
stock, goodwill)
iv. Other assets – miscellaneous items not readily fitting into any of the other asset category
o Liability: a firm’s financial obligations
i. Current liabilities – require payment or other actions within one year (EX. AP, accrued taxes)
ii. Long-term liabilities – debt with a maturity longer than one year (EX. Notes, bonds, or other
loans)
iii. Other liabilities – miscellaneous items not belonging to any other liability category
o Equity: an ownership interest in the company
Paid-in capital is the amount recieved by the company from issuing common stock
Retained earnings is the accumulated income not paid out as dividends but instead used to
finance company growth
ASSETS = LIABILITIES + EQUITY
Income statement: summary statement of a firm’s revenues and expenses ov
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