Financial Accounting for MBAs key
Portfolio words used 8th edition.
Intrinsic Value
present value of cash flows a company expects to generate in the future.
Four financial statements
1. Balance Sheet, 2. Income Statement, 3. Statement of Stakeholder's Equity, and 4. Statement of
Cash flows
Three activities a business, or strategic, plan plans for
1. investing activities, 2. operating activities, and 3. financing activities
Users of financial information
1. managers and employees, 2. invest analysis and information intermediaries, 3. Creditors and
suppliers, 4. stockholders and directors, 5. customers and strategic partners, 6. regulators and tax
agencies, and 7. voters and their representatives.
Covenants
Contractual requirements that restrict a borrowers behavior in some fashion.
Fundamental Analysis
Uses financial information to estimate company value and to form buy-sell stock strategies.
GAAP
General Accepted Accounting Principles
FAS
Financial Accounting Standards Board
IASB
International Accounting Standards Board
IFRS
International Financial Reporting Standards
SEC
Securities and Exchange Commission
Two main compulsory SEC filings:
1. 10-K - Audited Annual, 60-90 days, four financial statements, explanatory notes and MD&A
(management's discussion and analysis).
2. 10-Q - Unaudited Quarterly. Summary of four reports + limited additional disclosures.
Markets companies competing in: capital, labor, input and output markets
Costs of disclosure: Preparation/Dissemination,
Competitive disadvantages,
Litigation potential, and
Political costs.
Balance Sheet Reports a company's financial position at a point in time.
Reg FD SEC adopted Regulation Fair Disclosure act to curb the practice of selective disclosure
by issuers (public companies).
Endorsement Method FASB remains US standard setter and endorses new IFRS into the US
financial reporting system.
A balance sheet reports:
Portfolio words used 8th edition.
Intrinsic Value
present value of cash flows a company expects to generate in the future.
Four financial statements
1. Balance Sheet, 2. Income Statement, 3. Statement of Stakeholder's Equity, and 4. Statement of
Cash flows
Three activities a business, or strategic, plan plans for
1. investing activities, 2. operating activities, and 3. financing activities
Users of financial information
1. managers and employees, 2. invest analysis and information intermediaries, 3. Creditors and
suppliers, 4. stockholders and directors, 5. customers and strategic partners, 6. regulators and tax
agencies, and 7. voters and their representatives.
Covenants
Contractual requirements that restrict a borrowers behavior in some fashion.
Fundamental Analysis
Uses financial information to estimate company value and to form buy-sell stock strategies.
GAAP
General Accepted Accounting Principles
FAS
Financial Accounting Standards Board
IASB
International Accounting Standards Board
IFRS
International Financial Reporting Standards
SEC
Securities and Exchange Commission
Two main compulsory SEC filings:
1. 10-K - Audited Annual, 60-90 days, four financial statements, explanatory notes and MD&A
(management's discussion and analysis).
2. 10-Q - Unaudited Quarterly. Summary of four reports + limited additional disclosures.
Markets companies competing in: capital, labor, input and output markets
Costs of disclosure: Preparation/Dissemination,
Competitive disadvantages,
Litigation potential, and
Political costs.
Balance Sheet Reports a company's financial position at a point in time.
Reg FD SEC adopted Regulation Fair Disclosure act to curb the practice of selective disclosure
by issuers (public companies).
Endorsement Method FASB remains US standard setter and endorses new IFRS into the US
financial reporting system.
A balance sheet reports:
