Topical review
- Explain the basic structure of financial statements
- Balance sheet (A=L+E)
- Income statement (Profit=Rev-Exp)
- Statement of cash flows - sections are operating, investing, and financing
- Define and/or interpret each line item of the I/S and B/S
- Discuss how accounting policies affect financial statements
- LIFO vs. FIFO inventory accounting - effects on B/S and I/S
- Depreciation acceleration/deceleration – effects on B/S and I/S
- Assets booked at historical cost - ignores intangible assets (e.g., patents, technology, brand name)
- Distinguish cash and net income and calculate net cash flow and free cash flow
- Non-cash items such as depreciation
- Differentiate different definitions of capital used by a firm: operating, NOWC, total investor supplied capital
- Measure and interpret performance with NOPAT, ROIC, EVA, and MVA
- Calculate taxes given a tax table
- Discuss corporate tax issues such as dividend and interest income/payments
- Financial statement items: balance sheet and all accounts, income statement and each line, cash flow statement
- Financial measures: net operating profit after tax (NOPAT), net cash flow, free cash flow, economic value added (EVA), market value added (MVA), net operating working capital (NOWC), total operating capital
- Tax issues: double taxation, marginal tax, average tax
#8, 11, 12
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