07 - Fundamentals of Financial Reporting - 1
07 - Fundamentals of Financial Reporting - 1
07 - Fundamentals of Financial Reporting - 1
Financial Reporting
Cheat Sheets
Fundamentals of
Financial Reporting
BASICS OF ACCOUNTING
Basic Accounting
Assets = Liabilities + Equity
Equation
Gross profit (income) Gross profit (income) = Revenue – Cost of goods sold
Profit Before Tax (PBT) Profit before tax (PBT) = PBIT – Interest expense
[ ][ ][ ]
Convertible Convertible
Net
- Preferred
income dividends + preferred + debt (1 - t)
dividends interest
Diluted EPS =
( )( )( )( )
Shares from Shares from Shares
Weighted
average shares + conversion of + conversion of + issuable from
conv. pfd. shares conv. debt stock options
Gross profit
Gross profit margin Gross profit margin =
Revenue
Net profit
Net profit margin Net profit margin =
Revenue
Fundamentals of
Financial Reporting
UNDERSTANDING BALANCE SHEETS
LIQUIDITY RATIOS
Current assets
Current ratio Current ratio =
Current liabilities
SOLVENCY RATIOS
Long-term debt
Long-term Long-term debt-to-equity =
Total equity
debt-to-equity
Total debt
Total debt-to-equity Total debt-to-equity =
Total equity
NI = Net income
NCC = Non-cash charges
(depreciation and amortization)
FCFF = NI + NCC + [Int × (1 – tax rate)] – FCInv - WCInv Int = Cash interest paid
FCInv = Fixed capital investment
(net capital expenditures)
WCInv = Working capital investment
Necessary to Succeed.
Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.
Alternative Proxies: