FINE 2000 Chapter Notes - Chapter 3: Free Cash Flow, Cash Flow, Balance Sheet

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chocolatewolf465

18 Mar 2014

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The balance sheet is a financial statement that shows the value of the firm"s assets and liabilities at a particular date. Current assets are likely to be used or turned into cash in the near future. Long-term assets include tangible capital assets or fixed assets such as buildings, equipment, etc. , and investments in associated companies, showing the ownership interest in another business. On the other side of the balance sheet there are liabilities, and what is left over after liabilities have been paid is shareholders" equity. Shareholders" equity = total assets total liabilities. Book value vs. market value: generally accepted accounting principles (gaap): procedures for preparing financial statements. Book value: net worth of the firm according to the balance sheet. The market values of assets and liabilities do not equal their book values. Book values are based on historical or original values. Market values measure current values of assets and liabilities.

Related Questions

P5-3 Preparing a Balance Sheet and Analyzing Some of Its Parts LO5-3

Exquisite Jewelers is developing its annual financial statements for 2015. The following amounts were correct at December 31, 2015:

cash, $58,000; accounts receivable, $71,000; merchandise inventory, $154,000; prepaid insurance, $1,500;
investment in stock of Z corporation (long-term), $36,000; store equipment, $67,000; used store equipment held for disposal, $9,000;
accumulated depreciation, store equipment, $19,000; accounts payable, $52,500; long-term note payable, $42,000; income taxes payable, $9,000;
retained earnings, $164,000; and common stock, 100,000 shares outstanding, par value $1.00 per share (originally sold and issued at $1.10 per share).

Required:
1	Based on these data, prepare a December 31, 2015, balance sheet. (Amounts to be deducted should be indicated by a minus sign.)
	Possible input areas are shaded.

	EXQUISITE JEWELERS
	Balance Sheet
	December 31, 2015
	Assets
	Current assets:





	Total current assets		$ -
	Long-term investments:


	Fixed assets:



	Total fixed assets		-
	Other assets:


	Total assets		$ 377,500
	Liabilities
	Current liabilities:



	Total current liabilities		$ -
	Long-term liabilities:


	Total liabilities		-
	Stockholders' Equity
	Contributed capital:



	Total contributed capital	-


	Total stockholders' equity		-
	Total liabilities and stockholders' equity		$ -

Required:
2	What is the net book value of the store equipment?

	Net book value

taupedonkey505

2. Balance sheet

The balance sheet provides a snapshot of the financial conditionof a company. Investors and analysts use the information given onthe balance sheet and other financial statements to make severalinterpretations regarding the companyâs financial condition andperformance.

Blue Hamster Manufacturing Inc. is a hypothetical company.Suppose it has the following balance sheet items reported at theend of its first year of operation. For the second year, some partsare still incomplete. Use the information given to complete thebalance sheets for Blue Hamster Manufacturing Inc. for the yearsending December 31, Year 2 and 1, respectively.

Blue Hamster Manufacturing Inc.
Balance Sheet
For the Year ended December 31
	Year 2	Year 1		Year 2	Year 1
Assets			Liabilities and equity
Current assets:			Current liabilities:
Cash and equivalents		$55,350	Accounts payable	$0	$0
Accounts receivable	$25,312	$20,250	Accruals	$3,516	$0
Inventories	$74,250	$59,400	Notes payable	$19,921	$18,750
Total current assets	$168,750	$135,000	Total current liabilities		$18,750

Net fixed assets:			Long-term debt	$70,312	$56,250
Net plant and equipment		$165,000	Total debt	$93,750	$75,000
			Common equity:
			Common stock	$182,812	$146,250
			Retained earnings		$78,750
			Total common equity	$281,250	$225,000
Total assets	$375,000	$300,000	Total liabilities and equity	$375,000	$300,000

Given the information in the preceding balance sheetâandassuming that Blue Hamster Manufacturing Inc. has 50 million sharesof common stock outstandingâread each of the following statements,then identify the selection that best interprets the informationconveyed by the balance sheet.

Statement #1: Blue Hamsterâs pool of relatively liquid assets,which are available to support the companyâs current and futuresales, decreased from Year 1 to Year 2.

This statement is , because:

Blue Hamsterâs total current liabilities balance decreased by$33,750 between Year 1 and Year 2.

Blue Hamsterâs total current liabilities balance increased from$20,250 to $25,312 between Year 1 and Year 2.

Blue Hamsterâs total current asset balance actually increasedfrom $135,000 to $168,750 between Year 1 and Year 2.

Blue Hamsterâs total current asset balance decreased from$168,750 to $135,000 between Year 1 and Year 2.

Statement #2: In Year 2, Blue Hamster Manufacturing Inc. wasprofitable.

This statement is , because:

Blue Hamsterâs retained earnings account increased between theend of Years 1 and 2.

The cash and equivalents account increased between Years 1 and2.

Blue Hamsterâs total assets increased between Years 1 and 2.

Statement #3: The book value per share of Blue Hamsterâs stockin Year 2 was $5,625.

This statement is , because:

The per-share book value is calculated by dividing the companyâstotal assets by the number of outstanding shares of commonstock.

The per-share book value is calculated by dividing the companyâstotal debt by the number of outstanding shares of common stock.

The per-share book value is calculated by dividing the companyâstotal common equity by the number of outstanding shares of commonstock.

Based on your understanding of the different items reported onthe balance sheet and the information they provide, if everythingelse remains the same, then the cash and equivalents item on thecurrent balance sheet is likely to if the firm issues$3 million of new common stock.

Based on your understanding of the different items reported inthe balance sheet and the information they provide, which statementregarding Blue Hamster Manufacturing Inc.âs balance sheet isconsistent with U.S. Generally Accepted Accounting Principles(GAAP)?

The companyâs assets should be listed in alphabetical order.

The companyâs assets should be listed in the order in which theyare to be converted into cash.

The companyâs assets should be listed from those carrying thelargest balance to those with the smallest balance.

magentabuffalo389

Compare Companies --- Netflix (NFLX) vs. GEO Holdings (TOK) Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success. Analyze corporate financial data in evaluating past and future financial performances.

Use formulas to calculate the following financial indicators for each year of data: Three fiscal years for Netflix and GEO Holdings for:

o Price to earnings ratio

o Debt to equity ratio

o Free cash flow

o Earnings per share

o Return on equity

o Net profit margin

V. Performance Over Time

A. Analyze the performance of the Netflix over time. What financial strengths and weaknesses does this company have? Consider addressing the free cash flows and ratios you calculated earlier.

B. Analyze the performance of your GEO Holdings over time. What financial strengths and weaknesses does this company have? Consider addressing the free cash flows and ratios you calculated earlier.

C. Analyze how the data differ between these two companies. Why do you think this is? Consider addressing the free cash flows and ratios you calculated earlier.

VI. Investment

A. Are the companies considered growth or value companies? Why?

B. Which companyâs stock is the better investment?

Netflix Inc. (NMS: NFLX)

Exchange rate used is that of the Year End reported date


As Reported Annual Balance Sheet
Report Date	12/31/2016	12/31/2015	12/31/2014
Currency	USD	USD	USD
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Thousands	Thousands	Thousands

Cash & cash equivalents	1467576	1809330	1113608
Short-term investments	266206	501385	494888
Current content library, net	-	-	2125702
Current content assets, net	3726307	2905998	-
Other current assets	260202	215127	206271
Total current assets	5720291	5431840	3940469
Non-current content library, net	-	-	2773326
Non-current content assets, net	7274501	4312817	-
Information technology assets	185345	194054	189274
Furniture & fixtures	32185	30914	25758
Building	40681	40681	40681
Leasehold improvements	107945	107793	57339
DVD operations equipment	70152	88471	89144
Capital work-in-progress	108296	8845	12495
Property & equipment, gross	544604	470758	414691
Less: accumulated depreciation	294209	297346	264816
Property & equipment, net	250395	173412	149875
Other non-current assets	341423	284802	192981
Total assets	13586610	10202871	7056651
Current content liabilities	3632711	2789023	2117241
Accounts payable	312842	253491	201581
Accrued expenses	197632	140389	69746
Deferred revenue	443472	346721	274586
Total current liabilities	4586657	3529624	2663154
Non-current content liabilities	2894654	2026360	1575832
Long-term debt	3364311	2371362	900000
Other non-current liabilities	61188	52099	59957
Total liabilities	10906810	7979445	5198943
Common stock	1599762	1324809	60
Additional paid-in capital	-	-	1042810
Foreign currency	-47966	-42502	-4615
Change in unrealized gains on available for sale securities	-599	-806	169
Accumulated other comprehensive income (loss)	-48565	-43308	-4446
Retained earnings (accumulated deficit)	1128603	941925	819284
Total stockholders' equity (deficiency)	2679800	2223426	1857708

Geo Holdings Corp (TOK: 2681)

Due to changes with International Financial Reporting Standards (IFRS), recent financials statement presentations have been adjusted to meet this standard. Please note the original historical presentations have remained in the original format

Exchange rate used is that of the Year End reported date


As Reported Annual Balance Sheet
Report Date	03/31/2016	03/31/2015	03/31/2014
Currency	JPY	JPY	JPY
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Millions	Millions	Thousands
Cash & deposits	37683	32052	19869000
Trade notes & accounts receivables	4100	4077	3992000
Merchandise	24894	23834	23495000
Deferred tax assets	2156	1806	1773000
Other current assets	5462	7181	5942000
Allowance for doubtful accounts	-281	-292	343000
Total current assets	74015	68659	54729000
Asset for rent, gross	100974	104514	104647000
Accumulated depreciation - asset for rent	-95154	-97475	96055000
Asset for rent, net	5820	7038	8591000
Buildings & structures, gross	40872	39984	39478000
Accumulated depreciation - buildings & structures	-27470	-26362	25976000
Buildings & structures, net	13402	13622	13501000
Land, net	5844	6356	6651000
Leased assets, gross	2176	3519	4576000
Accumulated depreciation - leased assets	-681	-1764	2588000
Leased assets, net	1495	1754	1988000
Other property, plant & equipment, gross	24838	20562	17708000
Accumulated depreciation - other property, plant & equipment	-18391	-15292	13236000
Other property, plant & equipment, net	6447	5270	4471000
Total property, plant & equipment	33010	34043	35205000
Total intangible assets	1865	1277	2028000
Investment securities	926	1002	1266000
Long-term loans receivable	2250	6682	6628000
Lease & guarantee deposits	14905	14735	15034000
Deferred tax assets	3342	3774	2845000
Other investments & other assets	1222	1188	1760000
Allowance for doubtful accounts	-1332	-3751	3917000
Total investments & other assets	21315	23632	23617000
Total non-current assets	56192	58952	60851000
Total assets	130207	127612	115581000
Trade accounts payable	12631	13540	13124000
Current portion of long-term borrowings	8333	7097	8754000
Current portion of bonds	149	149	249000
Income taxes payable	4815	265	1170000
Reserve for bonuses	1665	1420	1135000
Other current liabilities	10135	12595	10279000
Total current liabilities	37731	35068	34713000
Bonds	105	254	403000
Long-term borrowings	19509	21843	13910000
Lease liabilities	1612	1660	1590000
Deferred tax liabilities	23	22	26000
Asset retirement obligations	4406	3994	3898000
Other non-current liabilities	1857	1554	1839000
Total non-current liabilities	27514	29329	21668000
Total liabilities	65246	64398	56381000
Capital stock	8871	8615	8603000
Capital surplus	3283	6090	6078000
Retained earnings	52542	49998	44381000
Treasury shares	-	-1979	334000
Total shareholders' equity	64697	62724	58729000
Valuation difference on available-for-sale securities	166	282	297000
Loss (gain) on deferred hedge	-15	-	297000
Total accumulated other comprehensive income	150	282	172000
Stock acquisition rights	113	206	59199000
Net assets	64961	63214	115581000
Total liabilities & net assets	130207	127612

Netflix Inc. (NMS: NFLX)

Exchange rate used is that of the Year End reported date


As Reported Annual Income Statement
Report Date	12/31/2016	12/31/2015	12/31/2014
Currency	USD	USD	USD
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Thousands	Thousands	Thousands

Revenues	8830669	6779511	5504656
Cost of revenues	6029901	4591476	3752760
Marketing expenses	991078	824092	607186
Technology & development expenses	852098	650788	472321
General & administrative expenses	577799	407329	269741
Operating income (loss)	379793	305826	402648
Interest expense	150114	132716	50219
Interest & other income (expense)	30828	-31225	-3060
Income before income taxes - United States	188078	95644	325081
Income (loss) before income taxes - foreign	72429	46241	24288
Income (loss) before income taxes	260507	141885	349369
Current tax provision (benefit) - federal	54315	52557	86623
Current tax provision (benefit) - state	5790	-1576	9866
Current tax provision (benefit) - foreign	60571	26918	16144
Total current tax provision (benefit)	120676	77899	112633
Deferred tax provision (benefit) - federal	-24383	-37669	-10994
Deferred tax provision (benefit) - state	-14080	-17635	-17794
Deferred tax provision (benefit) - foreign	-8384	-3351	-1275
Total deferred tax provision (benefit)	-46847	-58655	-30063
Provision for (benefit from) income taxes	73829	19244	82570
Net income (loss)	186678	122641	266799
Weighted average shares outstanding - basic	428822	425889	420546
Weighted average shares outstanding - diluted	438652	436456	431893
Year end shares outstanding	430054.212	427940.44	422910.887
Net income (loss) per share - basic	0.44	0.29	0.634
Net income (loss) per share - diluted	0.43	0.28	0.617
Number of full time employees	4500	3500	2189
Number of part time & temporary employees	200	400	261
Total number of employees	4700	3700	2450
Number of common stockholders	290	237	203
Foreign currency translation adjustments	-5464	-37887	-

Geo Holdings Corp (TOK: 2681)

Exchange rate used is that of the Year End reported date


As Reported Annual Income Statement
Report Date	03/31/2016	03/31/2015	03/31/2014
Currency	JPY	JPY	JPY
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Millions	Millions	Thousands
Total revenue	267910	270308	262324000
Cost of sales	-151798	-157825	152301000
Gross profit	116112	112483	110022000
Selling, general & administrative expenses	-99559	-102925	100823000
Operating income	16552	9558	9198000
Interest & dividend income	49	114	111000
Rental income	1268	1167	1193000
Other non-operating income	1043	1062	453000
Total non-operating income	2361	2343	1758000
Interest expense	-230	-231	332000
Rental expenses	-759	-609	595000
Transfer to reserve for doubtful account	-	-227	-
Other non-operating expenses	-100	-803	-
Total non-operating expenses	-1089	-1871	684000
Ordinary income	17824	10030	1612000
Imapirment loss	-1319	-1543	9344000
Other extraordinary losses	-13	-	203000
Total extraordinary losses	-1333	-1543	203000
Income before income taxes	16491	8486	1218000
Income taxes - current	-5779	-2074	514000
Income taxes - deferred	-147	925	87000
Total income taxes	-5927	-1149	1821000
Profit	10563	7337	7726000
Profit attributable to owners of parent	10563	7337	4027000
Average number of shares outstanding - basic	51.331	53.169	-39000
Average number of shares outstanding - diluted	51.623	53.29	3987000
Year end shares outstanding	48.244	52.295	3738000
Earnings per share - basic	205.78	137.99	-70000
Earnings per share - diluted	204.62	137.68	3808000
Number of full time employees	3825	3579	53996.5
Number of part time employees	10421	10114	54066.499
Number of common stockholders	57105	65030	53996.5

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FINE 2000 Chapter Notes - Chapter 3: Free Cash Flow, Cash Flow, Balance Sheet

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