Here are the key points about a company's cash flow statement:- It shows how much cash a company generated or used during a period from operating, investing and financing activities. - Operating activities include cash from sales and payments to suppliers/employees. - Investing activities include cash used for capital expenditures, acquisitions and sales of property/equipment.- Financing activities include cash from issuing/repaying debt, paying dividends, buying back stock.- It reconciles net income to net cash provided by operations by adjusting for non-cash items.- It's important because it shows if a company can internally fund operations and growth or relies on external financing.- Positive operating
The document provides an overview of financial intelligence and the importance of understanding financial numbers and information. It discusses how smart managers can make bad financial decisions due to emotional biases and an inability to make sense of numbers. The document emphasizes that financial numbers are estimates based on accounting judgments and that different accounting methods can produce different financial results. It also notes the importance of asking questions about the numbers to ensure they accurately reflect the company's performance and financial health. Overall, the document stresses the need to turn financial information into true financial knowledge and understanding in order to make strategic financial decisions.
Similar to Here are the key points about a company's cash flow statement:- It shows how much cash a company generated or used during a period from operating, investing and financing activities. - Operating activities include cash from sales and payments to suppliers/employees. - Investing activities include cash used for capital expenditures, acquisitions and sales of property/equipment.- Financing activities include cash from issuing/repaying debt, paying dividends, buying back stock.- It reconciles net income to net cash provided by operations by adjusting for non-cash items.- It's important because it shows if a company can internally fund operations and growth or relies on external financing.- Positive operating
Similar to Here are the key points about a company's cash flow statement:- It shows how much cash a company generated or used during a period from operating, investing and financing activities. - Operating activities include cash from sales and payments to suppliers/employees. - Investing activities include cash used for capital expenditures, acquisitions and sales of property/equipment.- Financing activities include cash from issuing/repaying debt, paying dividends, buying back stock.- It reconciles net income to net cash provided by operations by adjusting for non-cash items.- It's important because it shows if a company can internally fund operations and growth or relies on external financing.- Positive operating (20)
Here are the key points about a company's cash flow statement:- It shows how much cash a company generated or used during a period from operating, investing and financing activities. - Operating activities include cash from sales and payments to suppliers/employees. - Investing activities include cash used for capital expenditures, acquisitions and sales of property/equipment.- Financing activities include cash from issuing/repaying debt, paying dividends, buying back stock.- It reconciles net income to net cash provided by operations by adjusting for non-cash items.- It's important because it shows if a company can internally fund operations and growth or relies on external financing.- Positive operating
5. Neuron (nerve cell) is an electrically excitable
cell that processes and transmits information by
electrical and chemical signaling.
Obtain
Process
Store
Connect
5
11. A bat and a ball cost $1.10 in
total. The bat costs $1 more than
the ball. How much does the ball
cost?
X:bat X + Y = 1.10 1 + Y + Y = 1.10
Y:ball X-Y =1 Y = 0.05
11
12. A person's inability to make
sense of the numbers.
Do you know how to
deal with numbers?
12
22. A company has more cash today when:
A. Accounts receivable increases.
B. Profit increases.
C. Customers pay their bills sooner.
D. Retained earnings increases.
22
23. Income Statement
- How do you account for any expenses and revenues?
- Who decides how you should account for any expenses and
revenues? The management!
- How do they know? They don’t! They guess. Lots of
accounting decisions are just that – guesses.
23
25. - Accountants had to make
judgments decisions when they
record financial transaction
- Financial managers need to
make objective decisions based
on these numbers that they get
from accountants
25
26. Accountants should give the most
accurate picture of the company's
performance. (read footnotes)
- All financial decisions are based on judgment.
- Different methods produce different results.
26
28. It is very important that you ask
questions about the numbers to
make sure that they are what
you think they are.
28
29. - There is always accounting
judgment involved and that can
lead to manipulation
- Manipulation can benefit the
company (It is not illegal)
29
30. - Accounting change that is
material to the bottom line should
be footnoted but who decide what
is material and what isn’t?
Accountants
- GAAP only provide guidelines
30
31. Are the accountants making the right judgment decisions?
Questions:
Who control your organization?
31
33. Cooking the Financial Books
Assumptions (What ingredients to include)
Estimates (How much to include)
You may assume that they’re accurate
down to the last dollar. Not true! The
balance in the cash account is exact,
but virtually every other number you
see in a financial report is based on an
estimate.
33
35. - Sold equipments on four-year leases, including
service and maintenance.
- Booked all the revenues up front.
- Xerox mis-stated four years' worth of profits,
resulting in an overstatement of close to $6bn.
35
36. Channel Stuffing
Company inflates sales
figures by forcing more
products through a
distribution channel
than the channel is
capable of selling to the
world at large.
36
39. - Grow rapidly by buying
other garbage companies.
But didn't know to run them.
- Changed the depreciation
of their 20,000 tracks from
8-10 years to 12-15 years
and did the same for their 1.5
million dumpsters
- Took a pretax charge -a one-
time write off- of 3.54 billion
against its earnings
39
40. Which is more important?
A. How much you make
B. How much you keep
C. How much you borrow
D. How much you spend
Net Profit
40
43. Underreporting ‘line
costs’ (interconnection
expenses with other
telecommunication
companies) by capitalizing
these costs on the balance
sheet rather than properly
expensing them.
In June 2002, the company admitted it had inflated its
profits by $3.8bn between January 2001 and March 2002.
By the end of 2003, it was estimated that the company's
total assets had been inflated by around $11 billion
43
44. Goodwill
Goodwill =
Price paid - net assets (Assets - Liability)
Goodwill = $6 - (5 - 2) = 3
Goodwill could be amortized over a maximum
of forty years or the estimated useful life of the
acquired business.
44
46. Brand value accounts for
approximately %30 of the
market capitalization of
the S&P 500
(Millward Brown Optimor, 2007).
46
47. - Bought 600 companies in 2000 and 2001 (undervalued
the assets and increase the goodwill) = Higher profit
- Tyco suffered more than a $9 billion loss in 2002, which
included the asset impairment write-down by over $3
billion, losses of nearly $2 billion for the two restructuring
charges, and over $1 billion from the two goodwill
impairment charges. In all, the net charges totaled nearly
$7 billion of the loss that year.
47
48. If you own more than 50% of a
company it must be consolidated on
the parent company balance sheet,
but if you own less than 50%, it
typically stays off the balance sheet
as an unconsolidated affiliate.
Enron established partnerships that
enabled them to move some of their
debt into affiliate companies that
should have been independent but
weren't. Ultimately, the partnerships
were doing the borrowing, which
protected Enron's credit ratings.
48
52. Jack is looking at Anne, but Anne is
looking at George. Jack is married, but
George is not. Is a married person
looking at an unmarried person?
A. Yes
B. No
C. Cannot be determined
Jack Anne George
Married Unmarried
52
53. P r o f e s s i o n a l s ,
w h o
h a ve
knowledge
and
experience,
may
think
they
can
make
decisions
without
really
using
their
minds.
They
don’t
expect
new
things
and
they
miss
them.
They
look
at
the
details
and
forget
the
big
picture.
53
54. While you might not have all the
answers, you should know what
questions to ask.
54
learn how to deal with your emotions. (Don’t invest in the financial market when the market is moving up and don’t sell when the market is moving down )
When you are making financial decisions you are using numbers and financial information?
It is not about knowledge but rather using and applying the knowledge on real life situations
if you don’t know the asnwer
Are you good with numbers
Are you good with numbers
Stock broker understand numbers
Are you good with numbers
How to deal with financial information
How to deal with financial information
Market Capitalization
Future Cash Flow
that more information is always better. But I describe lots of cases in "Blink" where that simply isn't true. There's a wonderful phrase in psychology--"the power of thin slicing"--which says that as human beings we are capable of making sense of situations based on the thinnest slice of experience. (3 to 5)
You need to have the ability to eliminate any irrelevant items rather than focusing on more items.
This is not real profit
Many managers think that income statement shows how much the cash the company earned during the period
How much they spend and how much left over. And the left over amount will be the profit / No
Income statement focuses on revenue and expenses and profit
Accural Accounting method
Profit is not cash
Are you good with numbers
Profit is not cash
When you make decisions you should look at the Assumptions What are they (what to include and what not to include) – estimates how they are implemented – Bias of the implemeation– implications of the implemattion
Are you good with numbers
Playing with expenses
Do you follow your feelings when you make financial decisions or just the numbers?
You may feel that something is not right but the numbers are not telling you that.
Do you follow your intuition?
describe emotional reactions, gut feelings--thoughts and impressions that don't seem entirely rational.
snap judgments
Trust yourself and your ability to make right decisions
that more information is always better. But I describe lots of cases in "Blink" where that simply isn't true. There's a wonderful phrase in psychology--"the power of thin slicing"--which says that as human beings we are capable of making sense of situations based on the thinnest slice of experience. (3 to 5)
You need to have the ability to eliminate any irrelevant items rather than focusing on more items.
don’t always look at the numbers (marrage but really look at the big pitcure and follow you feelings) don’t frorce yourself to think
Do you follow your feelings when you make financial decisions or just the numbers?
You may feel that something is not right but the numbers are not telling you that.
Do you follow your intuition?
describe emotional reactions, gut feelings--thoughts and impressions that don't seem entirely rational.
snap judgments
Trust yourself and your ability to make right decisions
that more information is always better. But I describe lots of cases in "Blink" where that simply isn't true. There's a wonderful phrase in psychology--"the power of thin slicing"--which says that as human beings we are capable of making sense of situations based on the thinnest slice of experience. (3 to 5)
You need to have the ability to eliminate any irrelevant items rather than focusing on more items.
don’t always look at the numbers (marrage but really look at the big pitcure and follow you feelings) don’t frorce yourself to think
Do you follow your feelings when you make financial decisions or just the numbers?
You may feel that something is not right but the numbers are not telling you that.
Do you follow your intuition?
describe emotional reactions, gut feelings--thoughts and impressions that don't seem entirely rational.
snap judgments
Trust yourself and your ability to make right decisions
that more information is always better. But I describe lots of cases in "Blink" where that simply isn't true. There's a wonderful phrase in psychology--"the power of thin slicing"--which says that as human beings we are capable of making sense of situations based on the thinnest slice of experience. (3 to 5)
You need to have the ability to eliminate any irrelevant items rather than focusing on more items.
don’t always look at the numbers (marrage but really look at the big pitcure and follow you feelings) don’t frorce yourself to think
Do you follow your feelings when you make financial decisions or just the numbers?
You may feel that something is not right but the numbers are not telling you that.
Do you follow your intuition?
describe emotional reactions, gut feelings--thoughts and impressions that don't seem entirely rational.
snap judgments
Trust yourself and your ability to make right decisions
that more information is always better. But I describe lots of cases in "Blink" where that simply isn't true. There's a wonderful phrase in psychology--"the power of thin slicing"--which says that as human beings we are capable of making sense of situations based on the thinnest slice of experience. (3 to 5)
You need to have the ability to eliminate any irrelevant items rather than focusing on more items.
don’t always look at the numbers (marrage but really look at the big pitcure and follow you feelings) don’t frorce yourself to think