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Finance And Accounting-How To Interpret A Balance Sheet (Lecture 26)

I. Balance Sheet Overview Basic Accounting Equation Assets = Liabilities + Equity Current & Noncurrent Assets and Liabilities are divided into current noncurrent. Current are things used or paid in one year. Noncurrent of course are to be used or paid in a period longer than a year. 1. Current Assets Current assets are listed from the most liquid to the least liquid. Generally the order is something like: Cash & Cash Equivalents (Cash equivalents are risk free securities with a maturity date of 90 days or less, such as money market accounts, 3 month CDs and US Treasury Bills) Marketable Securities (liquid assets such as publicly traded stocks and bonds) Accounts Receivable (net of allowance for doubtful accounts) Other Current Assets (look at the footnotes to see what these include) 2. Long-Term Assets Property, Plant & Equipment (Recorded on the balance sheet at their original or historical costs, then depreciated over time) Intangible Assets (i...
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Finance And Accounting—Decision-Making Tools (Lecture 25)

I. Definitions A. Accounting is the means by which organizations communicate to key constituents how they are performing through accounting data. Internal users include managers, executives and owners that need to plan and control operations, manage resources, evaluate capital needs, and make strategic decision. External users , including investors, lenders, and suppliers, must evaluate the company's financial strength and performance to know whether to lend or invest capital in the organization. B. Finance focuses on how accounting information is used to make certain decision such as evaluating investment opportunities, how to best raise capital to run or expand operations, how to value stocks, bonds, etc. II. Standard Accounting Disclosures Publicly traded companies are required to file an annual report to shareholders and in the United States, they file the equivalent, the form 10-K, with with SEC, generally within 60-75 days after the end of their fiscal year. ...
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