Crash Course in Accounting and Financial Statement Analysis

About the Authors.
<p>Preface.</p>
<p>Chapter 1 Introduction to Accounting.</p>
<p>What Is Accounting?</p>
<p>Why Is Accounting Important?</p>
<p>Making Corporate Decisions.</p>
<p>Making Investment Decisions.</p>
<p>Accounting Facilitates Corporate and Investment Decisions.</p>
<p>Who Uses Accounting?</p>
<p>U.S. Accounting Regulations.</p>
<p>Generally Accepted Accounting Principles.</p>
<p>Overview of the Securities and Exchange Commission.</p>
<p>Overview of the Financial Accounting Standards Board.</p>
<p>International Accounting Regulations.</p>
<p>Convergence of U.S. GAAP and IFRS.</p>
<p>Summary.</p>
<p>Chapter 2 Basic Accounting Principles.</p>
<p>Assumptions.</p>
<p>Assumption 1: Accounting Entity.</p>
<p>Assumption 2: Going Concern.</p>
<p>Assumption 3: Measurement and Units of Measure.</p>
<p>Assumption 4: Periodicity.</p>
<p>Wrap–up: Assumptions.</p>
<p>Principles.</p>
<p>Principle 1: Historical Cost.</p>
<p>Principles 2 and 3: Accrual Basis.</p>
<p>Principle 4: Full Disclosure.</p>
<p>Wrap–up: Principles.</p>
<p>Constraints.</p>
<p>Constraint 1: Estimates and Judgments.</p>
<p>Constraint 2: Materiality.</p>
<p>Constraint 3: Consistency.</p>
<p>Constraint 4: Conservatism.</p>
<p>Summary.</p>
<p>Chapter 3 Financial Reporting.</p>
<p>Financial Reporting Overview.</p>
<p>Finding Financial Reports.</p>
<p>Form 10–K (Annual Filing).</p>
<p>Why Is the 10–K Important?</p>
<p>Form 10–Q (Quarterly Filing).</p>
<p>Other Important Filings.</p>
<p>Form 8–K.</p>
<p>Form S–1.</p>
<p>Form 14A.</p>
<p>Form 20–F.</p>
<p>Summary.</p>
<p>Chapter 4 Reading the Annual Report.</p>
<p>Introduction.</p>
<p>Letter to Stockholders.</p>
<p>Financial Highlights.</p>
<p>Management s Discussion and Analysis.</p>
<p>Financial Statements.</p>
<p>Income Statement.</p>
<p>Balance Sheet.</p>
<p>Cash Flow Statement.</p>
<p>Notes to Consolidated Statements.</p>
<p>Report of Management s Responsibilities.</p>
<p>Certification of Financial Statements.</p>
<p>Risk Factors.</p>
<p>Legal Proceedings.</p>
<p>Report of Independent Auditors.</p>
<p>Directors and Officers.</p>
<p>Summary.</p>
<p>Chapter 5 Income Statement.</p>
<p>What is the Income Statement?</p>
<p>Why Is It Important?</p>
<p>Revenues.</p>
<p>Not All Income Is Revenue.</p>
<p>Bad Debt Expense.</p>
<p>What Is Bad Debt Expense?</p>
<p>Revenue Recognition: To Recognize and When?</p>
<p>Revenue Recognition: Long–Term Projects.</p>
<p>Expense Recognition and Accrual Basis of Accounting.</p>
<p>Basic Principles Revisited: Accrual Basis of Accounting and Matching Principle.</p>
<p>Putting It All Together: The Accrual Basis of Accounting.</p>
<p>Why Use Accrual Accounting?</p>
<p>Accrual versus Cash Accounting: What s the Difference?</p>
<p>Revenue Manipulation.</p>
<p>Cost of Goods Sold.</p>
<p>COGS Do Not Include Administrative Costs.</p>
<p>Gross Profit.</p>
<p>Selling, General and Administrative.</p>
<p>Research and Development.</p>
<p>Stock Options Expense.</p>
<p>Depreciation Expense.</p>
<p>Depreciation Is a Phantom Noncash Expense.</p>
<p>Straight–Line Depreciation Method.</p>
<p>Accelerated Depreciation Methods.</p>
<p>Depreciation Methods Compared.</p>
<p>Amortization.</p>
<p>Amortization Is a Noncash Expense (Like Depreciation).</p>
<p>What Is the Difference between Depreciation and Amortization?</p>
<p>Summary.</p>
<p>Goodwill.</p>
<p>Goodwill Not Amortized after 2001.</p>
<p>Interest Expense.</p>
<p>Interest Income.</p>
<p>Other Nonoperating Income.</p>
<p>Income Tax Expense.</p>
<p>Equity Income in Affiliates.</p>
<p>Minority Interest.</p>
<p>Net Income.</p>
<p>Shares Outstanding.</p>
<p>Representation of Shares Outstanding in the Income Statement.</p>
<p>Common Dividends.</p>
<p>Preferred Dividends.</p>
<p>Earnings per Share.</p>
<p>Nonrecurring Items.</p>
<p>Unusual or Infrequent Items.</p>
<p>Discontinued Operations.</p>
<p>Extraordinary Items.</p>
<p>Accounting Changes.</p>
<p>Earnings before Interest, Taxes, Depreciation, and Amortization.</p>
<p>EBITDA: Popular Measure of a Company′s Financial Performance.</p>
<p>EBITDA Has Several Shortcomings.</p>
<p>EBIT.</p>
<p>Summary.</p>
<p>Chapter 6 Balance Sheet.</p>
<p>Introduction.</p>
<p>Assets Represent the Company s Resources.</p>
<p>Liabilities and Shareholders Equity Represent the Company s Sources of Funds (i.e., How It Pays for Assets).</p>
<p>Lemonade Stand and the Accounting Equation.</p>
<p>Balance Sheet.</p>
<p>Double–Entry Accounting.</p>
<p>Why Is Double–Entry Accounting Important?</p>
<p>Income Statement Revisited: Links to Balance Sheet.</p>
<p>Retained Earnings: The Link Between Balance Sheet and Income Statement.</p>
<p>Impact of Revenues on the Balance Sheet.</p>
<p>Impact of COGS on the Balance Sheet.</p>
<p>Impact of SG&amp;A on the Balance Sheet.</p>
<p>Impact of Depreciation on the Balance Sheet.</p>
<p>Impact of Interest Expense on the Balance Sheet.</p>
<p>Impact of Tax Expense on the Balance Sheet.</p>
<p>Total Impact of the Year on the Balance Sheet.</p>
<p>Summary.</p>
<p>Order of Liquidity.</p>
<p>Current versus Noncurrent Assets.</p>
<p>Current versus Long–Term Liabilities.</p>
<p>Assets.</p>
<p>Inventories.</p>
<p>LIFO Reserve: The Link between FIFO and LIFO Inventory Methods.</p>
<p>Writing Down Inventories.</p>
<p>Deferred Taxes.</p>
<p>PP&amp;E, Net of Depreciation.</p>
<p>Reconciliation of PP&amp;E.</p>
<p>Fixed Asset Impairments.</p>
<p>Fixed Asset Retirement and Disposal.</p>
<p>Intercompany Investments.</p>
<p>Consolidation.</p>
<p>Intangible Assets.</p>
<p>Goodwill.</p>
<p>Summary: Intangible Assets and Goodwill.</p>
<p>Summary: Assets.</p>
<p>Liabilities.</p>
<p>Other Typical Current Liabilities.</p>
<p>Debt.</p>
<p>Short–Term Debt versus Long–Term Debt.</p>
<p>Capital Leases.</p>
<p>Operating Leases.</p>
<p>Deferred Taxes.</p>
<p>Summary: Deferred Taxes.</p>
<p>Pensions.</p>
<p>Defined Benefit Plan.</p>
<p>Minority Interest.</p>
<p>Summary: Liabilities.</p>
<p>Shareholders Equity.</p>
<p>Introduction.</p>
<p>Common Stock.</p>
<p>Additional Paid–In Capital.</p>
<p>Preferred Stock.</p>
<p>Treasury Stock.</p>
<p>Retained Earnings.</p>
<p>Summary: Shareholders Equity.</p>
<p>Summary.</p>
<p>Chapter 7 Cash Flow Statement.</p>
<p>Introduction.</p>
<p>Cash Flow Statement to the Rescue!</p>
<p>Cash Flow from Operations.</p>
<p>Overview.</p>
<p>Indirect Method.</p>
<p>Getting from Net Income to Cost from Operations.</p>
<p>Depreciation.</p>
<p>Working Capital.</p>
<p>Changes in Accounts Receivable.</p>
<p>Changes in Accounts Receivable and the Lemonade Stand.</p>
<p>Changes in Inventories.</p>
<p>Changes in Inventories and the Lemonade Stand.</p>
<p>Changes in Accounts Payable.</p>
<p>Accounts Payable and the Lemonade Stand.</p>
<p>Changes in Other Current Assets.</p>
<p>Changes in Other Current Liabilities.</p>
<p>Increases/Decreases in Deferred Taxes.</p>
<p>Summary: Cash Flow from Operations.</p>
<p>Cash Flow from Investing Activities.</p>
<p>Overview.</p>
<p>Components.</p>
<p>Cash Flow from Financing Activities.</p>
<p>Overview.</p>
<p>Components.</p>
<p>How the Cash Flow Is Linked to the Balance Sheet.</p>
<p>Summary.</p>
<p>Online Exercise.</p>
<p>Chapter 8 Financial Ratio Analysis.</p>
<p>Introduction.</p>
<p>What Is Financial Ratio Analysis?</p>
<p>Liquidity Ratios.</p>
<p>Current Ratio.</p>
<p>Quick (Acid) Test.</p>
<p>Current Cash Debt Coverage Ratio.</p>
<p>Profitability Ratios.</p>
<p>Gross Profit Margin.</p>
<p>Profit Margin on Sales.</p>
<p>Return on Assets.</p>
<p>Return on Equity.</p>
<p>Earnings per Share.</p>
<p>Price–to–Earnings Ratio.</p>
<p>Payout Ratio.</p>
<p>Activity Ratios.</p>
<p>Receivables Turnover.</p>
<p>Days Sales Outstanding.</p>
<p>Inventory Turnover.</p>
<p>Days Sales of Inventory.</p>
<p>Asset Turnover.</p>
<p>Coverage Ratios.</p>
<p>Debt to Total Assets.</p>
<p>Times Interest Earned.</p>
<p>Cash Debt Coverage Ratio.</p>
<p>Calculations.</p>
<p>Appendix.</p>
<p>Stock Options.</p>
<p>Stock Options Expensing.</p>
<p>Then . . . .</p>
<p>. . . and Now.</p>
<p>Debt.</p>
<p>How Are These Two Forms of Capital Raised?</p>
<p>Who Issues Debt?</p>
<p>Long–Term Debt.</p>
<p>Capital versus Operating Leases.</p>
<p>Direct Method.</p>
<p>Index.</p>