Financial Statement Analysis

It is worth more this year rather than next year because if you receive it this year and you decide to invest in it you will gain interest on the thousand dollars you received this year. It illustrates the concept of interest. It is important for firms because it benefits them in terms of long term investment.

Care has been taken to calculate incremental revenue for each wave for successive years and then subtracting the current year 's figures from the

By discounting back the free cash flows (FCF) for each year would allow use to see if this

of, say, $40 at time 1. If the good economy state is also realized in year 2, P.V.’s

set the prior year. This wage base is subject to a 6.2% social security tax, also known

5. Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in (Page 1002)

2005 total current assets $10,250 / $12,281 = 83.5% or a decrease from 2004 to 2005

Annual Cash Budget - Year 1 Assumptions January February March April May June July August September October November December Sales 100% 22,814 24,399 25,984 27,569 30,769 32,324 35,494 38,664 38,664 32,324 29,154 25,984 Cash Inflows: 364,143 6.27% 6.70% 7.14% 7.57% 8.45% 8.88% 9.75% 10.62% 10.62% 8.88% 8.01% 7.14% Cash 22,814 24,399 25,984 27,569 30,769 32,324 35,494 38,664 38,664 32,324 29,154 25,984 Loan Proceeds 175,000 Total Inflows: 197,814 24,399 25,984 27,569 30,769 32,324 35,494 38,664 38,664 32,324 29,154 25,984 Cash Outflows: Purchases 38.00% 8,669.32

back three years and forward twenty years from the year in which they are incurred,

Base year. The year used as the common reference point when keeping values in constant dollars. Values in different years are expressed in terms of the purchasing power of the common base year in order to remove the effect of inflation.

Because the asset will not generate end-of-year cash flows after year 2, the present value of the remaining cash

the formula as shown in the image starts to look like multiplying the year by the addition of the

If $100 is placed in an account that earns a nominal 4 percent, compounded quarterly, what will it be worth in 5 years?

YEAR 0 2009 1 2010 2 2011 3 2012 4 2013 5 2014 6 2015 7 2016 8 2017 9 2018 10 Initial Investment Gross Revenue 2 COGS 3 Add'l revenue Less: COGS Loan down payment 4 Loan repayment Depreciation Additional workers Land square required Moving cost 5 Operating Expenses Total Expenses Net Income Before Tax Income Tax Net Income After Tax After Tax Cash Flow ATCF Cummulative ATCF NPV through Year N

then it comes with a lag of 2 months (e.g. figures for quarter Jan-Mar 2008