*Financial Statements

*Financial StatementsFinancial Statements

*Balance SheetA firms balance sheet presents a snapshot view of the companys financial position at a specific point in time.

assets = liabilities + stockholders equity

*Balance Sheet for Global Petroleum Corporation

*Income StatementIncome is also called profit, earnings, or margin.

Income = revenue expenses

*Income Statement for Global Petroleum Corporation

*Statement of Retained EarningsThe statement of retained earnings reconcilesthe net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year.

*Statement of Retained Earningsfor Global Petroleum Corporation

*Financial Statements

*Cash Flow AnalysisAlthough financial managers are interested in the information contained in the firms accrual-based financial statements, their primary focus is on cash flows.Without adequate cash to pay obligations on time, to fund operations and growth, and to compensate owners, the firm will fail.

*The Firms Cash Flows

*Free Cash FlowOperating cash flow= earnings before interest and taxes taxes+ depreciationFree cash flow= operating cash flow change in gross fixed assets change in current assets+ change in account payables+ change in accrued liabilities

*Inflows and Outflows of Cash

*Statement of Cash Flows for Global Petroleum Corporation

*Analyzing Financial PerformanceUsing Ratio Analysis

*Using Financial Ratios

*Liquidity Ratios

*Activity Ratios

*Debt Ratios

*Profitability Ratios

*Profitability Ratios

*Profitability Ratios

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*Corporate TaxesCorporate taxes represent a significant cash outflow.

*Financial Statement and Cash Flow AnalysisBalance SheetIncome StatementCash Flow AnalysisLiquidity RatiosActivity RatiosDebt RatiosProfitability RatiosMarket Ratios