unit_2_financial statement and ratio

7/23/2019 Unit_2_Financial Statement and Ratio

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UNIT 2:FINANCIAL

STATEMENTS ANDRATIOS


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SAMPLE OF BALANCE SHEETBalance SheetAccount Description Debit Credit------- ------------------------------ ---------- ----------1400 1500.00

1000 899.011100 1000.001300 2100.99---------- ----------Total Assets 5500.00

2100 3500.00

---------- ----------Total Liabilities 3500.00

3100 4000.003200 2000.00---------- ----------Total Equity 2000.00

---------- ----------Total Liabilities and Equity 5500.00


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SAMPLE OF PROFIT AND LOSS STATEMENT


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MATCH


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A B

1. Consolidated a. Assets

2. Retained b. Receivables

. C!""ent c. Ea"nin#s

$. Total d. Stoc%

&. Acc!'!lated e. (ains

). Intan#ible *. Liabilities

+. Co''on #. A,liates

g.

c

b

f

e

a

d


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_______________ a. An asset which does not have a physical nature(such as a trademark or a patent).

_______________ b. The holding company owns a minority interest(less than 50%), but the accounts are nevertheless consolidated._______________ c. The total legal obligations of a company to payother parties

_______________ d. The ordinary shares by the owners, whotherefore the last to receive their money back in the event of

liquidation_______________ e. Amounts that will be collected in the normalcourse of business within one year.

_______________ f. Profit which is not paid out to shareholders inthe form of dividends, but instead is kept by the company toreinvest or pay off debts.

_______________ g. The amounts affecting common stockholders,but not from movements in the stock of the company (e.g.currency translation adjustments)


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a. Intangible assets

b. Consolidated affiliates

c. Total liabilites

d. Common stock

e. Current receivables

f. Retained earnings

g. Accumulated gains


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FILL IN THE TABLE

U.K U.S.A Vietnam

Balance sheet Statement of

Financial Position

Bo co ti

chnh

Profit and Loss

Statement

Statement of

Earnings

Bn bo co

li l

Shareholder Stockholder C ng

Stock Inventory Bn k ti

snGearing Leverage T s vn vay


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Balance sheet:- A written statement showing the amount of moneyand property a company has- The money received from shareholders and creditors(bng quyt ton, bng cn i k ton, bng i chiuti sn v n, bng tng kt ti sn)


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Net earnings

a It's better than last year.

e A lot more this year.

f It's not as low as two years ago


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Interest and financial charges

b It's gone down since last year.

Basic earnings per share

h It's exactly the same.


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Earnings before income taxes andaccounting changes


e A lot more this year


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Total revenues


e A lot more this year

a It's better than last year.


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Dividends declared per share

C Slightly more this year

Other costs and expenses

g It's virtually the same.

Sales of services

g It's virtually the same.

C Slightly more this year


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AccountantOK. Norma has asked me to go over someof the ratios I used in the report which I sent you lastweek. The first of these is on page 3 -working capital.Everyone got it? OK. Working capital is quite simple -

it's the current assets divided by the currentliabilities. Any questions? Yes. What's it for?AccountantWell, it basically tells us whether we haveenough short-term assets to cover our short termdebt. If we don't, we could be in trouble. OK? Good.Next isreturn on assets.This is net income plus

interest expense divided by total assets. Before youask, it allows us to evaluate the way we use ourassets. It can help us decide whether or not weshould start a new project, for example, bycomparing the return expected against the normalborrowing costs. Is that clear?


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AccountantI have a question. What'sdebt/asset ratio?

AccountantI was just coming to that. It'sthe total assets divided by total liabilities.It tells us what proportion of theenterprise's assets are being financedthrough the use of debt. If this ratio is high

in a market with increasing interest rates,creditors are going to get worried. Thedebt/asset ratio determines the fundingleverage of the enterprise. OK, if there areno questions, I'd like to ...


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(I-EDEFINITIONS (1) Working capital (2) Return on Assets (3) Debt/ Asset Ratio

tec!""entassets

dividedb/ tec!""ent

liabilities

net inco'e 0l!s

inte"est e0ensedivided b/ totalassets

total assetsdivided b/ totalliabilities


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SAIN( E3UATIONS4FORMULAS

Plus, add, and

Minus, less, subtract

Divided by,

times, multiplied byEquals, is

atimes (multiplied by)bequals

caminusbdivided by (or over)c

+-

=axb = c

a-b/ c

Note

x


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5RACTICE SAIN( 6..

7 + 8 = 15 20- 12= 8

2 x 6 = 12 50: 5 = 10


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COMMON RATIOS

ave"a#einte"est"ate

ea"nin#s

0e"sa"e

"et!"n on e7!it/

debt4e7!it/ "atio


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COMMON RATIOS

#"oss 0"o8t 'a"#in

invento"/t!"nove"

0"ice4ea"nin#s"atio


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a. ("oss 0"o8t 'a"#in: t9 s

#i; c

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