AFM101 Chapter Notes - Chapter 5: Current Liability, Cash Flow, Accounts Receivable
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18 Apr 2016
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Chapter 5 analysing and interpreing cash flows. Operaing aciviies: to generate income invesing aciviies, property, plant, equipment, buying/selling shares from another company, long-term investments. Inancing aciviies: loans, issuing, buyback etc. of shares, paying dividends. Current assets + non-current assets = current liabiliies + non-current liabiliies. Cash lows relaing to: current assets are typically operaing aciviies. Non-current assets are typically invesing aciviies current liabiliies are typically operaing aciviies. Recorded and paid income taxes to the federal government. Recorded an adjusing entry for expiraion of a prepaid expense. Purchased new equipment by singing a three-year note. Direct method (chapter 5. 7: monitors the exact cash low for each account. Indirect method: starts with net income, and add/deduct things that didn"t afect cash. Capital acquisiions raio: cash flow from operaing aciviies / cash paid for ppe, simple luctuaions, usually would use muliple years of data (3 years, makes enough money to inance own operaions (no borrowing)
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What are the Balance Sheet Ratios (debt-to-asset and debt-to-equity ratios) for the following financial information? (PLEASE SHOW WORK SO I CAN UNDERSTAND HOW THIS WAS DONE. Thank you)
| GENERAL ELECTRIC CO (GE) CashFlowFlag BALANCE SHEET | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Assets | ||
| Current assets | ||
| Cash | ||
| Cash and cash equivalents | 90208 | 70483 |
| Short-term investments | 47907 | 31973 |
| Total cash | 138115 | 102456 |
| Receivables | 23237 | 27022 |
| Inventories | 17689 | 22515 |
| Other current assets | 233911 | 18834 |
| Total current assets | 412952 | 170827 |
| Non-current assets | ||
| Property, plant and equipment | ||
| Gross property, plant and equipment | 113321 | 90961 |
| Accumulated Depreciation | -46934 | -35927 |
| Net property, plant and equipment | 66387 | 54095 |
| Equity and other investments | 33822 | 12673 |
| Goodwill | 76553 | 65526 |
| Intangible assets | 14156 | 16745 |
| Deferred income taxes | 2541 | 3105 |
| Other long-term assets | 41938 | 169721 |
| Total non-current assets | 235397 | 321865 |
| Total assets | 648349 | 492692 |
| Liabilities and stockholders' equity | ||
| Liabilities | ||
| Current liabilities | ||
| Short-term debt | 79231 | 50810 |
| Accounts payable | 16338 | 13680 |
| Accrued liabilities | 12537 | 15776 |
| Other current liabilities | 54990 | 25764 |
| Total current liabilities | 163096 | 106030 |
| Non-current liabilities | ||
| Long-term debt | 222910 | 147466 |
| Deferred taxes liabilities | ||
| Pensions and other benefits | 40487 | |
| Minority interest | 8674 | 1864 |
| Other long-term liabilities | 125510 | 98571 |
| Total non-current liabilities | 357094 | 288388 |
| Total liabilities | 520190 | 394418 |
| Stockholders' equity | ||
| Preferred stock | 6 | |
| Common stock | 702 | 702 |
| Additional paid-in capital | 32889 | 37613 |
| Retained earnings | 155333 | 140020 |
| Treasury stock | -42593 | -63539 |
| Accumulated other comprehensive income | -18172 | -16528 |
| Total stockholders' equity | 128159 | 98274 |
| Total liabilities and stockholders' equity | 648349 | 492692 |
| GENERAL ELECTRIC CO (GE) CashFlowFlag INCOME STATEMENT | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Revenue | 148589 | 117386 |
| Cost of revenue | 81311 | 82693 |
| Gross profit | 67278 | 34693 |
| Operating expenses | ||
| Sales, General and administrative | 30572 | 17831 |
| Other operating expenses | 9995 | |
| Total operating expenses | 40567 | 17831 |
| Operating income | 26711 | 16862 |
| Interest Expense | 9482 | 3463 |
| Other income (expense) | -5213 | |
| Income before taxes | 17229 | 8186 |
| Provision for income taxes | 1772 | 6486 |
| Net income from continuing operations | 15457 | 1700 |
| Net income from discontinuing ops | -112 | -7495 |
| Other | -112 | -331 |
| Net income | 15233 | -6126 |
| Preferred dividend | 18 | |
| Net income available to common shareholders | 15233 | -6144 |
| Earnings per share | ||
| Basic | 1.51 | -0.62 |
| Diluted | 1.5 | -0.61 |
| Weighted average shares outstanding | ||
| Basic | 10045 | 9944 |
| Diluted | 10123 | 10016 |
| EBITDA | 35994 | 16496 |
| GENERAL ELECTRIC CO (GE) Statement of CASH FLOW | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Cash Flows From Operating Activities | ||
| Net income | 15345 | -6126 |
| Depreciation & amortization | 9283 | 4847 |
| Deferred income taxes | -1186 | 383 |
| (Gain) Loss from discontinued operations | 112 | 7495 |
| Accounts receivable | ||
| Inventory | -872 | -314 |
| Accounts payable | 305 | -541 |
| Other working capital | -2428 | -1048 |
| Other non-cash items | 7151 | 15195 |
| Net cash provided by operating activities | 27710 | 19891 |
| Cash Flows From Investing Activities | ||
| Investments in property, plant, and equipment | -13727 | -7309 |
| Property, plant, and equipment reductions | 6262 | 3020 |
| Acquisitions, net | 311 | -9744 |
| Sales/Maturities of investments | ||
| Other investing activities | 2124 | 73521 |
| Net cash used for investing activities | -5030 | 59488 |
| Cash Flows From Financing Activities | ||
| Debt issued | 37548 | 13951 |
| Debt repayment | -47038 | |
| Preferred stock issued | ||
| Common stock issued | 2842 | |
| Dividend paid | -8851 | -9295 |
| Other financing activities | -48497 | -33672 |
| Net cash provided by (used for) financing activities | -16958 | -76054 |
| Effect of exchange rate changes | -3492 | -3464 |
| Net change in cash | 2230 | -139 |
| Cash at beginning of period | 88787 | 91017 |
| Cash at end of period | 91017 | 90878 |
| Free Cash Flow | ||
| Operating cash flow | 27710 | 19891 |
| Capital expenditure | -13727 | -7309 |
| Free cash flow | 13983 | 12582 |
What is the return on Invested Capital (ROIC) for the financial data? (PLEASE SHOW WORK SO I CAN UNDERSTAND HOW THIS WAS DONE. Thank you)
| GENERAL ELECTRIC CO (GE) CashFlowFlag BALANCE SHEET | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Assets | ||
| Current assets | ||
| Cash | ||
| Cash and cash equivalents | 90208 | 70483 |
| Short-term investments | 47907 | 31973 |
| Total cash | 138115 | 102456 |
| Receivables | 23237 | 27022 |
| Inventories | 17689 | 22515 |
| Other current assets | 233911 | 18834 |
| Total current assets | 412952 | 170827 |
| Non-current assets | ||
| Property, plant and equipment | ||
| Gross property, plant and equipment | 113321 | 90961 |
| Accumulated Depreciation | -46934 | -35927 |
| Net property, plant and equipment | 66387 | 54095 |
| Equity and other investments | 33822 | 12673 |
| Goodwill | 76553 | 65526 |
| Intangible assets | 14156 | 16745 |
| Deferred income taxes | 2541 | 3105 |
| Other long-term assets | 41938 | 169721 |
| Total non-current assets | 235397 | 321865 |
| Total assets | 648349 | 492692 |
| Liabilities and stockholders' equity | ||
| Liabilities | ||
| Current liabilities | ||
| Short-term debt | 79231 | 50810 |
| Accounts payable | 16338 | 13680 |
| Accrued liabilities | 12537 | 15776 |
| Other current liabilities | 54990 | 25764 |
| Total current liabilities | 163096 | 106030 |
| Non-current liabilities | ||
| Long-term debt | 222910 | 147466 |
| Deferred taxes liabilities | ||
| Pensions and other benefits | 40487 | |
| Minority interest | 8674 | 1864 |
| Other long-term liabilities | 125510 | 98571 |
| Total non-current liabilities | 357094 | 288388 |
| Total liabilities | 520190 | 394418 |
| Stockholders' equity | ||
| Preferred stock | 6 | |
| Common stock | 702 | 702 |
| Additional paid-in capital | 32889 | 37613 |
| Retained earnings | 155333 | 140020 |
| Treasury stock | -42593 | -63539 |
| Accumulated other comprehensive income | -18172 | -16528 |
| Total stockholders' equity | 128159 | 98274 |
| Total liabilities and stockholders' equity | 648349 | 492692 |
| GENERAL ELECTRIC CO (GE) CashFlowFlag INCOME STATEMENT | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Revenue | 148589 | 117386 |
| Cost of revenue | 81311 | 82693 |
| Gross profit | 67278 | 34693 |
| Operating expenses | ||
| Sales, General and administrative | 30572 | 17831 |
| Other operating expenses | 9995 | |
| Total operating expenses | 40567 | 17831 |
| Operating income | 26711 | 16862 |
| Interest Expense | 9482 | 3463 |
| Other income (expense) | -5213 | |
| Income before taxes | 17229 | 8186 |
| Provision for income taxes | 1772 | 6486 |
| Net income from continuing operations | 15457 | 1700 |
| Net income from discontinuing ops | -112 | -7495 |
| Other | -112 | -331 |
| Net income | 15233 | -6126 |
| Preferred dividend | 18 | |
| Net income available to common shareholders | 15233 | -6144 |
| Earnings per share | ||
| Basic | 1.51 | -0.62 |
| Diluted | 1.5 | -0.61 |
| Weighted average shares outstanding | ||
| Basic | 10045 | 9944 |
| Diluted | 10123 | 10016 |
| EBITDA | 35994 | 16496 |
| GENERAL ELECTRIC CO (GE) Statement of CASH FLOW | ||
| Fiscal year ends in December. USD in millions except per share data. | 2014-12 | 2015-12 |
| Cash Flows From Operating Activities | ||
| Net income | 15345 | -6126 |
| Depreciation & amortization | 9283 | 4847 |
| Deferred income taxes | -1186 | 383 |
| (Gain) Loss from discontinued operations | 112 | 7495 |
| Accounts receivable | ||
| Inventory | -872 | -314 |
| Accounts payable | 305 | -541 |
| Other working capital | -2428 | -1048 |
| Other non-cash items | 7151 | 15195 |
| Net cash provided by operating activities | 27710 | 19891 |
| Cash Flows From Investing Activities | ||
| Investments in property, plant, and equipment | -13727 | -7309 |
| Property, plant, and equipment reductions | 6262 | 3020 |
| Acquisitions, net | 311 | -9744 |
| Sales/Maturities of investments | ||
| Other investing activities | 2124 | 73521 |
| Net cash used for investing activities | -5030 | 59488 |
| Cash Flows From Financing Activities | ||
| Debt issued | 37548 | 13951 |
| Debt repayment | -47038 | |
| Preferred stock issued | ||
| Common stock issued | 2842 | |
| Dividend paid | -8851 | -9295 |
| Other financing activities | -48497 | -33672 |
| Net cash provided by (used for) financing activities | -16958 | -76054 |
| Effect of exchange rate changes | -3492 | -3464 |
| Net change in cash | 2230 | -139 |
| Cash at beginning of period | 88787 | 91017 |
| Cash at end of period | 91017 | 90878 |
| Free Cash Flow | ||
| Operating cash flow | 27710 | 19891 |
| Capital expenditure | -13727 | -7309 |
| Free cash flow | 13983 | 12582 |
What are the coverage ratios for the following data (using formula below)? Please show how you came up with solution. Thank you Times interest earned = EBIT / Interest expense = ?? Times burden covered = EBIT / Interest + Principal repayment / 1 - tax rate = ??
| MICROSOFT CORP BALANCE SHEET | ||
| 2014 | 2015 | |
| Assets | ||
| Cash | ||
| Cash and cash equivalents | $8,669 | $5,595 |
| Short-term investments | $77,040 | $90,931 |
| Total cash | $85,709 | $96,526 |
| Receivables | $19,544 | $17,908 |
| Inventories | $2,660 | $2,902 |
| Deferred income taxes | $1,941 | $1,915 |
| Other current assets | $4,392 | $5,461 |
| Total current assets | $114,246 | $124,712 |
| Non-current assets | ||
| Gross property, plant and equipment | $27,804 | $32,337 |
| Accumulated Depreciation | -$14,793 | -$17,606 |
| Net property, plant and equipment | $13,011 | $14,731 |
| Equity and other investments | $14,597 | $12,053 |
| Goodwill | $20,127 | $16,939 |
| Intangible assets | $6,981 | $4,835 |
| Other long-term assets | $3,422 | $2,953 |
| Total non-current assets | $58,138 | $51,511 |
| Total assets | $172,384 | $176,223 |
| Liabilities and stockholders' equity | ||
| Liabilities | ||
| Current liabilities | ||
| Short-term debt | $2,000 | $7,484 |
| Accounts payable | $7,432 | $6,591 |
| Taxes payable | $782 | $606 |
| Accrued liabilities | $4,797 | $5,096 |
| Deferred revenues | $23,150 | $23,223 |
| Other current liabilities | $7,464 | $6,858 |
| Total current liabilities | $45,625 | $49,858 |
| Non-current liabilities | ||
| Long-term debt | $20,645 | $27,808 |
| Deferred taxes liabilities | $2,728 | $2,835 |
| Deferred revenues | $2,008 | $2,095 |
| Other long-term liabilities | $11,594 | $13,544 |
| Total non-current liabilities | $36,975 | $46,282 |
| Total liabilities | $82,600 | $96,140 |
| Stockholders' equity | ||
| Common stock | $68,366 | $68,465 |
| Retained earnings | $17,710 | $9,096 |
| Accumulated other comprehensive income | $3,708 | $2,522 |
| Total stockholders' equity | $89,784 | $80,083 |
| Total liabilities and stockholders' equity | $172,384 | $176,223 |
| MICROSOFT CORP INCOME STATEMENT | ||
| (USD in millions except per share data) | 2014 | 2015 |
| Revenue | $86,833 | $93,580 |
| Cost of revenue | $26,934 | $33,038 |
| Gross profit | $59,899 | $60,542 |
| Operating expenses | ||
| Research and development | $11,381 | $12,046 |
| Sales, General and administrative | $20,632 | $20,324 |
| Restructuring, merger and acquisition | $127 | $0 |
| Other operating expenses | $0 | $10,011 |
| Total operating expenses | $32,140 | $42,381 |
| Operating income | $27,759 | $18,161 |
| Interest Expense | $597 | $781 |
| Other income (expense) | $658 | $1,127 |
| Income before taxes | $27,820 | $18,507 |
| Provision for income taxes | $5,746 | $6,314 |
| Net income from continuing operations | $22,074 | $12,193 |
| Net income | $22,074 | $12,193 |
| Net income available to common shareholders | $22,074 | $12,193 |
| Earnings per share | ||
| Basic | $2.66 | $1.49 |
| Diluted | $2.63 | $1.48 |
| Weighted average shares outstanding | ||
| Basic | $8,299 | $8,177 |
| Diluted | $8,399 | $8,254 |
| EBITDA | $33,629 | $25,245 |
| MICROSOFT CORP CASH FLOW STATEMENT | ||
| (USD in millions except per share data) | 2014 | 2015 |
| Cash Flows From Operating Activities | ||
| Net income | $22,074 | $12,193 |
| Depreciation & amortization | $5,212 | $5,957 |
| Investment/asset impairment charges | $0 | $7,498 |
| Investments losses (gains) | -$109 | -$443 |
| Deferred income taxes | -$331 | $224 |
| Stock based compensation | $2,446 | $2,574 |
| Accounts receivable | -$1,120 | $1,456 |
| Inventory | -$161 | -$272 |
| Accounts payable | $473 | -$1,054 |
| Other working capital | $1,432 | $1,383 |
| Other non-cash items | $2,315 | -$436 |
| Net cash provided by operating activities | $32,231 | $29,080 |
| Cash Flows From Investing Activities | ||
| Investments in property, plant, and equipment | -$5,485 | -$5,944 |
| Acquisitions, net | -$5,937 | -$3,723 |
| Purchases of investments | -$72,690 | -$98,729 |
| Sales/Maturities of investments | $65,366 | $85,861 |
| Other investing activities | -$87 | -$466 |
| Net cash used for investing activities | -$18,833 | -$23,001 |
| Cash Flows From Financing Activities | ||
| Debt issued | $10,350 | $10,680 |
| Debt repayment | -$3,888 | -$1,500 |
| Common stock issued | $607 | $634 |
| Common stock repurchased | -$7,316 | -$14,443 |
| Excess tax benefit from stock based compensation | $271 | $588 |
| Dividend paid | -$8,879 | -$9,882 |
| Other financing activities | $461 | $4,843 |
| Net cash provided by (used for) financing activities | -$8,394 | -$9,080 |
| Effect of exchange rate changes | -$139 | -$73 |
| Net change in cash | $4,865 | -$3,074 |
| Cash at beginning of period | $3,804 | $8,669 |
| Cash at end of period | $8,669 | $5,595 |
| Free Cash Flow | ||
| Operating cash flow | $32,231 | $29,080 |
| Capital expenditure | -$5,485 | -$5,944 |
| Free cash flow | $26,746 | $23,136 |
