AC 310 1st Edition Exam 3 Study Guide Lectures 8 11 Lecture 8 February 3 Balance Sheet Statements tell a story about the company Current Assets will be converted to cash or consumed within one year or the operating cycle Cash Cash Equivalents Short term investments Receivables Inventories Prepaid Expenses The correct order to present current assets is Cash Marketable trading securities accounts receivable inventories prepaid items Noncurrent Assets not expected to be converted to cash consumed within one year Investments bonds stock note receivable securities o Land held for speculation fixed asset o Sinking fund pension fund cash surrender value Cash these aside to meet long term obligations Cash surrender value buy life insurance policies for key executives part of monthly premium goes here no access until he dies or leaves the company PPE Land held for speculation Intangible Assets Current Liabilities obligations that will not be satisfied within one year or the operating cycle Accounts Payable Notes Payable Accrued Liabilities Unearned Revenues Current Maturities of long term debt Long Term Liabilities obligations that will not be satisfied within one year Long term notes long term bonds Mortgages Pension obligations lease obligations Shareholder s Equity Capital Stock Additional Paid In Capital Retained Earnings Accumulated Other Comprehensive Income Every item on the Balance Sheet IS a result of a past transaction Balances sheet shows generating cash flows and assesses the ability to pay current obligations BALANCE SHEET FORMAT Current Assets Cash Available for sale securities Accounts Receivable Notes receivable Inventories Supplies Prepaid expenses Total Current Assets Long Term Investments Equity investments Property plant and equipment Land Buildings Equipment Less Accumulated Depreciation Total PPE Intangible Assets Goodwill Current Liabilities Notes payable Accounts payable Accrued interest Income taxes payable Accrued Salaries wages and other liabilities Deposits received from customers Total Current Liabilities Stockholders Equity Paid in capital Common stock Retained earnings Lecture 9 February 5 Ratio Analysis Current Ratio Current Assets Current Liabilities Acid test ratio quick ratio quick assets current liabilities Debt to equity ratio total liabilities shareholders equity Times interest earned ratio Net income Interest Expense Income Taxes Interest Expense Lecture 10 February 10 Statement of Cash Flows Three different activities operating investing financing Operating Current Assets Current Liabilities Dividend Revenue Investing Noncurrent Liabilities Financing Long Term Debt Stockholder s Equity Note Payable Cash dividends Two Methods Direct Method Indirect Method Direct does not include non cash expenses Indirect Starts with net income Adjusts for depreciation other non cash items Depreciation amortization restructuring charges Adjusts for non operating gains and losses Subtract GAINS and add back LOSSES Adjusts for timing differences with changes in current asset and liability accounts Lecture 11 February 24 Time Value of Money Calculator N number of periods I interest PV present value PMT amount of annuity payment FV future value