Textbook Notes (363,185)
Canada (158,247)
Finance (361)
FIN 300 (120)
Chapter 2

Chapter 2.docx

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Ryerson University
FIN 300
Michael Inglis

Chapter 2Financial Statements Cash Flow and Taxes 21 The Balance Sheet Balance sheetFS of accounting val on particular date snapshot summarize assets owns liabilities owes and equity diff b 2left sideright sideAssetsLiabilitiesSH equityin order of liquiditylength of time to convert to cashABC Comp Balance Sheet Dec 31 2011 Assets Liabilities and Owners EquityCurrent Assets Current LiabilitiesCashxxx AP xxx ARxxx NP xxxInventory xxxTotal xxx Totalxxx Long term debt xxx Fixed Assets Owners EquityNet PPExxx Common shares xxx Total assets xxxRExxxTotal xxx Total Liabilities and owners equity Assets The Lefthand Sidereflects line of businessCurrent assetlife less than 1 yr o convert cash win 1 yr o inventory ARFixed Capital assetlong life o Tangibletruck o IntangiblepatentLiabilities and Owners Equity The Righthand Sidereflects use of debtCurrent liabilitieslife less than 1 yrobligation paid win 1 yr o listed b4 long term liabilities o APLong term Liabilitydebt not due win 1 yr o sources for borrowingbond and bondholders SH equityif firm were to sell all of its assets and useto pay off debtresidual val belong to SH Net Working CapitalNet working capitalCurrent AssetsCurrent LiabilitiesveCACLhealthy firm Liquidity
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