Interpreting and Analyzing Financial Statements

This is the eBook of the printed book and may not include any media, website access codes, or print supplements that may come packaged with the bound book. This text helps students analyze real company financial statement information. Each activity in the book concentrates on only one aspect of the analysis and uses data from well-known corporations to pique students' interest and add relevancy.

Table of Contents:
Chapter 1: Introduction Nike, Under Armour, Adidas WHAT IS ACCOUNTING? THE FOUR FINANCIAL STATEMENTS THE BALANCE SHEET THE INCOME STATEMENT STATEMENT OF STOCKHOLDERS’ EQUITY STATEMENT OF CASH FLOWS GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Historical Cost Principle INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) RATIO ANALYSIS Debt Ratio Asset Turnover Ratio Return on Sales (ROS) Ratio Return on Assets (ROA) Ratio TREND ANALYSIS COMMON-SIZE STATEMENTS ACTIVITIES Chapter 2: Balance Sheet The Walt Disney Company, News Corp, Time Warner INTRODUCTION UNDERSTANDING THE WALT DISNEY COMPANY’S BALANCE SHEET Current Assets Noncurrent Assets Current Liabilities Noncurrent Liabilities INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) DEBT VERSUS EQUITY ANALYZING THE BALANCE SHEET Liquidity: Current Ratio Solvency: Debt Ratio Trend Analysis Common-size Balance Sheet ACTIVITIES Chapter 3: Income Statement Amazon.com, Sears Holdings, eBay, Starbucks INTRODUCTION UNDERSTANDING AMAZON.COM’S INCOME STATEMENT STEP ONE: REVENUES — COST OF SALES = GROSS PROFIT Revenues and Revenue Recognition Expenses and the Matching Principle STEP TWO: GROSS PROFIT — OPERATING EXPENSES = OPERATING INCOME STEP THREE: OPERATING INCOME +/- NONOPERATING REVENUES AND EXPENSES = INCOME BEFORE INCOME TAX STEP FOUR: INCOME BEFORE INCOME TAX — PROVISION FOR INCOME TAX = INCOME FROM CONTINUING OPERATIONS STEP FIVE: INCOME FROM CONTINUING OPERATIONS +/- NONRECURRING ITEMS = NET INCOME ANALYZING THE INCOME STATEMENT Return on Sales Asset Turnover Ratio Return on Assets Gross Profit Margin Trend Analysis Common-Size Analysis ACTIVITIES Chapter 4: Statement of Stockholders’ Equity Freeport-McMoRan Copper & Gold INTRODUCTION STOCKHOLDERS’ EQUITY ON THE BALANCE SHEET STATEMENT OF STOCKHOLDERS’ EQUITY TREASURY STOCK RETAINED EARNINGS OTHER COMPREHENSIVE INCOME STOCK SPLITS & STOCK DIVIDENDS RETURN ON EQUITY FINANCIAL LEVERAGE RATIO TIMES INTEREST EARNED RATIO EARNINGS PER SHARE DIVIDEND RATE PRICE EARNINGS RATIO ACTIVITIES Chapter 5: Statement of Cash Flows Cedar Fair, L.P. INTRODUCTION THREE CATEGORIES OF CASH FLOWS Financing Activities Investing Activities Operating Activities Operating Activities—The Direct Method Operating Activities—The Indirect Method INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) ANALYZING THE STATEMENT OF CASH FLOWS Free Cash Flow Cash Flow Adequacy Cash Flow Liquidity Quality of Income ACTIVITIES Chapter 6: Specific Accounts Research in Motion Limited, Motorola Mobility, Inc. INTRODUCTION CASH AND CASH EQUIVALENTS INVESTMENTS ACCOUNTS RECEIVABLE Accounts Receivable Turnover Accounts Receivable Days INVENTORY Specific Identification First-In, First-Out Last-In, First-Out International Financial Reporting Standards Gross Profit Margin Inventory Turnover Inventory Days PROPERTY, PLANT, AND EQUIPMENT Straight-Line Depreciation Double-Declining Balance Depreciation Comparing Straight-Line with Double-Declining Balance Gains and Losses on Sale of PPE International Financial Reporting Standards CURRENT AND LONG-TERM LIABILITIES ACTIVITIES Chapter 7: The Accounting Cycle INTRODUCTION THE 10-STEP ACCOUNTING CYCLE ANALYZE TRANSACTIONS USING THE ACCOUNTING EQUATION PREPARE JOURNAL ENTRIES USING DEBITS AND CREDITS Step 1: Analyze and Prepare Transaction Journal Entries (TJEs) Step 2: Post TJEs to the Ledger Step 3: Prepare the Unadjusted Trial Balance Step 4: Prepare Adjusting Journal Entries (AJEs) Step 5: Post AJEs to the Ledger St