F8 Flashcards
(61 cards)
Diluted EPS=If Basic EPS’ll go down
(Income for common shareholders +Interest saved)/WASCO if all diluted securities were converted
Savings to numerator:
- Options/Warrant-nothing to save. Use Treasury method. Reduce # of shares bought for proceeds/Mkt Price
- Convertible bonds. Save on interest expense (add back net of tax interest*(1-Tax) plus discount. Use if converted method. Earliest convertible date
- Convertible preferred stock. Save on dividends. Add back 100% of saved dividends. Use if converted method. DIVIDENDS ARE NOT TAX DEDUCTABLE. IGNORE TAX RATE.
Diluted EPS.
Denominator:
Diluted if:
*Options Strike Price
If Antidilutive Securities (increase basic EPS) or option is out of the money
Ignore, Do not include in EPS calculation
Basic EPS
Always take into account Cumulative Preferred Stock Dividends even if it was not declared
Basic EPS if Stock dividends given
Stock dividends apply to all manupulations with stock except buying back (TS). Calculate wacso without dividend coefficient, then* 1.05 if 5% dividends minus treasury stock
EPS for comparative FS
If stock split happen in 2nd year, 1st year stock needs to be adjusted to split s well for comparison
Stock split and Dividends
Apply to the beginning of the year or even beginning of prior year if comparative FS
Multiply all changes to split/dividend stock %, e.g. Treasury stock sold
Statement of cash flow
Operating – This section displays the cash effects of the line items that make up the calculation of net income.
Investing – This section displays the cash effects of non-current asset transactions, such as purchases and sales of fixed assets and investments and lending activities.
Financing – This section displays the cash effects of borrowing, or paying back debt, and buying or selling the equity of the company.
Gain from sale of using equipment in cash flow statement
Reported as deduction from bet income from operating activities
Difference GAAP vs IFRS
GAAP-operating. IFRS-Investing:
Interest Received
Dividends Received
GAAP-operating. IFRS-Financing:
Interest Paid
GAAP-financing, IFRS operating or financing: Dividends paid
GAAP-Operating. IFRS-Operating, Inv or Financing depending of activities
Taxes Paid
Direct method. Ignore Net Income, Depritiatin, G/L
- Cash received form customers. Inflow.
Revenue
(-Increase in AR + Decrease in AR) change
(+Increase in unearned rev-Decrease in unearned revenue)
- Cash Paid to suppliers and employees:
COGS
+Increase in inventory (buying outflow) more money spend
-Decrease in inventory (selling inflow)
-Increase in AP (borrowing inflow)
+Decrease in AP (payment)
+Increase in Allowance for uncollectable accounts (reduce AR contra Asset account)
Salaries and Wages Expense
-Increase in wages payable +/-Change in Wages Payable
+Decrease in wages payable (Payroll)
Direct method
\+Interest/Dividends received \+Trading securities sold \+Insurance proceeds -Interest paid (decrease cash) -Income Tax paid (decrease cash) -Cash paid to buy trading securities (decrease)
Other Operating Expenses
-Decrease in Prepaid Exp +Increase in Prepaid Expense
+Decrease in Accrued Liabilities -Increase in Accrued Liabilities
Indirect method
DO NOT DOUBLE COUNT:
Dividends received (already in net income)
Gain/Loss on sale of Trading securities if Cash from Trading securities given
Net Income \+Depreciation/Amortization \+Loses -Gains -Amortization of Bonds Premium -Equity Earnings \+/- Change in OA(except cash/cash equialent) \+/- Change in OL (Payables) except interest bearing: notes, bonds.
Operating Cash Flow
Trading securities Interest income Interest Expense Dividends received Gain/Loss on sale of used equipment
Investing Cash Flow
Purchasing/Selling PPE
Purchase of somebody’s stock, Long term, nontrading securities
Financing Cash Flow (own debt)
Loans,
Paying Principal on Debt
Issuing Stock/Repurchasing Stock
Paying Dividends
No Net cash flow. Disclosure in Supplemental info
Depreciation
Increase in Lease Payable-just disclose (no cash)
Record income of equity method
Operating Cash Flow
Net Income
+Plus AR (got no cash)
-Minus AP (saved cash)
*IFRS -Paid Dividends
Disclose in Supplementary info if
PPE was purchased in exchange of stock=# of stock* FV of stock
Operating CF under direct method
Cash received from customers - minus Cash paid to Suppliers- Other Cash Payments (Income Tax Paid, Interest Paid)
Beginning Cash + Change in Cash=Ending CASH
do not include any gain in direct
Income Tax Payment=Earning Before Tax-Net Income= Income Tax Expense-increase in Interest Expense Payable
- Cash received
Revenue
+Decrease in AR
+Dividends received - Cash Paid to suppliers
COGS
-Decrease inventory
-Increase AP - Other
- Interest paid
- Taxes Paid
Cash Received under direct method
Revenue
-Increase in AR
+Increase Unearned Rev
+Sale of trading securities
A change in a debit balance account has the OPPOSITE effect on the net balance of cash.
• A change in a credit balance account has the SAME effect on the net balance of cash.
Calculating change in OA/ OL
Fundraising expenses in NFP
Classified as supporting activities
