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Wall Street Oasis - Valuation Complete revision guide with answers
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Wall Street Oasis - Valuation Completerevision guide with answers
Income Statement - (answers)Revenue - cost of goods sold - expenses = net income The amount of
income the company is operating with
Balance Sheet - (answers)Assets = Liabilities + Shareholder's equity Companies total ability to make
money
Cash Flow Statement - (answers)Beginning cash + Cash Flow from operations + Cash Flow from investing
+ Cash Flow from financing = Ending Cash
shows adjustments for non-cash
expenses, non-expense purchases such as capital expenditures, changes in working capital, or debt
repayment and issuance to calculate the company's ending cash balance.
How are the three main financial statements connected? - (answers)Net income flows from the Income
Statement into cash flow from operations on the Cash flow statement
(Net income - dividends) is added to retained earnings from the prior period's balance sheet to get
retained earnings on the current period's Balance sheet
Beginning Cash on cash flow statement is cash from prior period's balance sheet, and Ending cash on
cash flow statement is cash from current period's balance sheet
Income statement - Part 2 - (answers)Net income is beginning point for the cash flow statement
Interest expense on the Income statement is calculated from the debt on the balance sheet
Depreciation and Amoritization: From PP&E(Property, Plant and Equipment) from the balance sheet
Net income - dividends paid = addition to retained earnings on the balance sheet
,Cash Flow statement - Part 2 - (answers)Organized into Cash flow from operations, investing and
financing
Net income is the first lines, and comes from the income statement
Adjust for non-cash items(Depreciation and Amortization)
Adjust for change in working capital(change in current assets and current liabilities)
Final line: change in cash
Beginning cash: prior period's balance sheet + change in cash begets ending cash balance on current
period's balance sheet
Balance Sheet - Part 2 - (answers)Debt is affected by Cash Flow from financing, includes amortization of
debt, optional amortizatin, repayments, new debt issuance, etc
Cash balance is determined from the cash flow statement
PP&E and goodwill are reduced in value by depreciation and amortization
retained earnings are increased/decreased by net income minus dividends paid as described above
Elements of an Income Statment - (answers)Revenues
-cost of goods sold
= Gross Margin
-operating expenses
=Operating Income(aka EBIT)
(add/subtract) Interest Expenses/Income
(add/subtract) Other expenses/Income
, (subtract) Taxes
= Net Income
3 components of Cash Flow statement - (answers)Cash from operations:
Cash generated or lost via normal operations, sales, and changes in working capital
Cash from Investing:
- Cash generated or spent on investing activities; may include, for example,
capital expenditures (use of cash) or asset sales (source of cash).
Cash from financing:
Cash from spent financing the business.
Add cash to business: proceeds from debt or equity issuance
Use of Cash: cost of debt or equity repurchase
If you had one financial statement to evaluate the financial health of a company? - (answers)The Cash
Flow statement, because it would show how much cash a business has on hand, and whether it can stay
solvent
Difference between income statement and cash flow statement - (answers)Income statement: A
company's sales and expenses are recorded
Cash Flow Statement: Use of cash during the reporting period
Examples of Income Statement: Amortization/Depreciation expenses on income statement
Examples of Cash Flow Statement:
issuance or repurchase of debt or equity
Link between the Balance Sheet and Income statement - (answers)Profits on income statement after any
payments of dividends are added to shareholders equity
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