IMBA财政会计9合集课件.ppt

1、This weeks individual HW Page 197 of In-class exercises ONLYThe Qualities of a Good Analyst Report FormatProfessional layoutsSmoothly divided into sectionsSections logically structured and connectedClearly wordedThe Qualities of a Good Analyst Report Contents1.Summary of analysis2.Introduction of co

2、vered company2.1 Industry analysis2.2.Company analysis3.Quality of earnings analysis4.Profitability analysis5.Growth analysis 6.Earnings forecasts7.Risk analysis8.Valuation9.RecommendationThe Qualities of a Good Analyst ReportComments:1.Be aware,you make a living(a nice apt.,a decent wedding,a good

3、education for your child,a comfortable retirement plan)from selling your analyst reports to investors.2.You do not have to STRICTLY follow the aforementioned format.Use the format that you believe sells your analysis well.3.Be creative!4.Be professional!5.Be Ethical!Important datesDecember 3,NO CLAS

4、S,preparation for report and presentationDecember 17,report DUE,turn in a hardcopy in class,and email me an electronic copy.Electronic copies to be placed on class websiteDecember 24,presentation.Starts at 8:30,20 minutes for each group.Before presentation,I randomly choose ONE presenter from the gr

5、oup.Feel free to come to discuss your project with me!Grading Guideline1.The format and contents of the report2.The format and contents of the presentation3.The presenters 精神面貌4.The way to handle questions5.English is lesser an issue6.I accept challenges to grading,but reserve the rights to make the

6、 final judgment!Obligation A social,legal,or moral requirement,such as a duty,contract,or promise that compels one to follow or avoid a particular course of action.()Liability Recognition An obligation is a liability if:1.It involves a probable future sacrifice of resources and the amount of the sac

7、rifice can be reasonably precisely measured.2.There is little or no discretion to avoid the transfer3.The transaction or event that gives rise to the obligation has already occurred A mutual promise(or executory contract)is not a liability because of item 3 above.This is,signing a contact is not a t

8、ransaction.An example of a mutual promise is the customer promises to pay and the firm promises to deliver goods at a date.If this promise is in the form of a legal contract,it may give both parties rights but the rights are not yet considered assets and the obligations are not yet considered liabil

9、ities,because the transaction specified in the promises has not yet occurred.Classifications of Accounting Liabilities by Degree of Certainty on repayment dates and repayment amountsRead examples 1-9 on page 478-450 of Stickney and WeilAccounting Items:Recognized versus DisclosedAccounting items who

10、se economic impact on the firm can be measured with reasonable precision,are recognized in the I/S or B/S,such as the liabilities to the left of the dividing line in the previous slide.Accounting items whose economic impact on the firm can NOT be measured with reasonable precision,are sometimes disc

11、losed in annual reports,such as contingency liabilities to the right of the dividing line.Contingencies:Potential Liabilities Contingent liabilities are potential liabilities related to past events.The more probable the potential to become a legal obligation,the greater the rationale for recognizing

12、 it as a liability.Probability of a potential liability is very difficult to measure.In general,an obligation should be recognized as a liability if it is probable that the firm will have make future sacrifices of resources.Of course,the word probable is also difficult to measure.Contingencies are n

13、ormally disclosed in footnotes.But,FASB and IASC require the recognition of a loss and a contingent liability,when,given past events,It is probable that an asset has been impaired or a liability incurred,and The amount of the loss can be reasonably estimated.Liability Valuation In general,liabilitie

14、s are presented on the balance sheet at the present value of payments needed to fulfill the obligation.Present value refers to discounting the nominal payments by an interest rate appropriate for the firm.Discounting is a mathematical computation whereby future flows are reduced to reflect the conce

15、pt that money has time value.(See Appendix A at the back of the text.)Current liabilities are not generally discounted because of the short period of time until they are to be resolved.The short period of time would cause the amount of any discount to be small enough to be considered immaterial.Liab

16、ility Classification Liabilities are separated into current and noncurrent based on the length of time that will elapse before the obligation must be fulfilled.Current liabilities are obligations that must be fulfilled within the current operating cycle which is almost always one year.Noncurrent lia

17、bilities are obligations that need not be fulfilled within the current operating cycle.Obligations calling for periodic payments such as a mortgage may be noncurrent but have a current portion;that is,the payments due within the operating cycle are current but the remaining payments are noncurrent.C

18、urrent Liabilitiesa.Accounts payableb.Short-term notes and interest payablec.Wages,salaries and other payroll itemsd.Income taxes payablee.Deferred performance liabilities:advances from customersf.Deferred performance liabilities:product warrantiesAccounts Payable to Creditors Business firms often b

19、uy and sell to each other on credit.Amounts owed to other businesses for services or goods are called trade accounts payable.Typically these are short-term liabilities.Typically,a payment grace period is allowed before these obligations must be fulfilled(or paid).A grace period may be 30 days or mor

20、e.Because such a grace period represents interest-free borrowing,the prudent firm takes advantage by paying exactly on time but not before.Rarely,a firm is more aggressive and always pays late,but a late charge may be assessed and such a firm will develop a reputation which may affect the terms they

21、 can negotiate.Short-Term Notes and Interest Payable A note payable is a form of short term borrowing.The note accrues interest expense and interest payable at a stated rate over time.The total amount of the note and the interest are mostly due as one payment upon maturity of the note.Wages,Salaries

22、 and Other Payroll Items Employers pay workers directly in cash and in the form of benefits -this gives rise to payroll expense For example,vacation time may be earned over time.The firm pays taxes on this benefit as it is earned and a liability to the worker is recorded.When vacation is taken,the l

23、iability is reduced.Employers also pay some taxes that relate to the workers-these are tax expenses.Income Taxes PayableU.S.and most countries tax business income.Corporations are taxed directly.Partnerships and sole proprietorships are not taxed but the income is assigned to the partners or proprie

24、tor who must then pay the tax.Income taxes are assumed to accrue;that is,the income tax liability increases as the firm earns income.Tax rules also call for periodic payments to the IRS.So that business income taxes are estimated and paid throughout the year.The annual filing deadline(March 15)is a

25、reporting deadline and not a payment deadline;payment in many cases is required earlier.In addition,GAAP allows for differences between income tax expense(an accrual concept)and income tax liability(the amount owed to IRS).This is covered in a later chapter under deferred tax accounting.Deferred Per

26、formance Liabilities:Advances from CustomersA mutual promise(the customer promises to pay and the firm promises to deliver)is not recorded.However,if the customer pays in advance,then there is an obligation that arises and the firm records this as an increase in an asset(cash)and an increase in a li

27、ability(advances from customers,unearned revenues).The obligation is for the firm to either fulfill its promise to deliver goods or services within the specifications of the contract or return the cash.An example is a magazine subscription which is typically paid in advance.The subscription is an ob

28、ligation to produce and deliver the magazine.When a magazine is delivered,the obligation can be reduced(debited)and revenue can be recognized(credited)because it is then earned.Deferred Performance Liabilities:Product WarrantiesA warranty is a promise to repair or replace the good but is limited by

29、time.When goods with a warranty are sold:revenue,the warranty expense,and the warranty liability are recognized.The amount of the liability must be estimated.When a claim is made,the warranty liability is reduced(debited)and what is given to fulfill the claim(cash or new goods or parts and labor)are

30、 credited.Any unused portion of the warranty expires at the end of the warranty period reducing the liability and creating a gain.Long-Term Liabilitiesa.Bondsb.MortgagesProcedures for Recording Long-Term LiabilitiesWhereas short term liabilities may be paid at maturity,long-term liabilities are more

31、 commonly paid in installments.Also,the general rule is that long-term liabilities are recorded at the present value of the payments.The accountant distinguishes between payment of the liability(the principle)and payment of interest(an expense of financing).Commonly,the principle,the periodic paymen

32、ts and the interest rates are explicitly stated in the debt contract.If not,then discounted cash flow methods may be used to separate out the interest payment.The rate of interest that equated the present value of a given set of periodic payments with the principle is called the internal rate of ret

33、urn or discount rate).If you are confused with this slide,please skip and return after Finishing this chapter.Long-term Liabilities:Interest ImputationSome contracts do not explicitly state interest payments,instead the purchase price may include carrying charges.There is no economic concept of an i

34、nterest-free loan.The interest may not be expressed,but it is there.The IRS agrees and will require the tax payer to calculate interest payments even if the contract does not specifically state a rate of interest(called implicit or imputed interest).GAAP agrees and requires that long term liabilitie

35、s be recorded at their present value and that repayments be separated into interest expense and reduction of the liability.Where interest rates are not stated,they can be computed using present value methods and using the know payments with An estimate of market value(which becomes the PV),or An est

36、imate of the interest rate for similar debt.If you are confused with this slide,please skip and return after Finishing this chapter.Bonds Bonds are debt instruments sold to the investing public.Some bonds carry no collateral（担保）and are called debenture bonds.Bonds backed by collateral are called col

37、lateral trust bonds.Bonds that can be converted to common shares of the issuing company are called convertible bonds.Bonds are recorded as a long-term liability.How to define a bond?1.A piece of paper2.Face value(or par value):for example$1,0003.A nominal（名义上的）（名义上的）interest rate:for example 10%(the

38、 rate is annual rate if not stated otherwise.Semiannual rate is half of it at 5%).4.Duration:number of years before the principle is due,for example,5 years5.Frequency of nominal interest payment in a year:annually pays once a year;semiannually pays twice a year(so a five-year bond would have ten se

39、miannual periods)How to define a bond?The definition of a bond is the pattern of its cash payments to the bondholders,nothing else(STOP:This is the first important concept in bond accounting,you must understand before you go on)The bond in the previous slide is defined as:This bond is defined by ten

40、$50 payments of nominal interests every half a year(semiannually);and a payment of par value$1,000 at the end of the fifth year.$50$50$50$50$50$50$50$50$50$50$1,000How much will this bond sell for?Like any investment vehicles,the price of a bond is the net present value of its future cash payments(N

41、PV)The bond price and the par value of the bond are totally two different things,they do not have to be the same.The previous bond can be sold more than or less than the par value$1,000.(STOP:This is the second important concept in bond accounting,you must understand before you go on)I assume you ha

42、ve learnt NPV calculations,and The use of present value tables.How much will this bond sell for?The rate of return that we use to discount the cash flows to get NPV of the bond is called discount rate（折现率）（折现率）.Discount rate is decided,at the time of the bond sale,by the risk associated with the bon

43、d.If it is more(less)likely for the bond seller to default in the future,the discount rate will higher(lower).Microsofts bond discount rate may be 4.8%,while a small food chains bond discount rate has to be 10.7%.Discount rate has nothing to do with the bonds nominal interest rate;nominal interest r

44、ate only determines the cash payments($50 each in this case).(STOP:This is the third important concept in bond accounting,you must understand before you go on)How much will this bond sell for?-sold at parLet us assume the previous bonds discount rate is 10%(this 10%has nothing to do with the 10%nomi

45、nal interest rate).Then the bond price is=50/(1+5%)+50/(1+5%)2+50/(1+5%)3+50/(1+5%)4+50/(1+5%)10+1000/(1+5%)10=$1,000 Why we use 5%discount rate not the 10%?Because the$50 nominal interest payment is for half a year.We use 10 periods because five years make up ten half-a-years.When bond price is equ

46、al to bond face value,we say it is sold at par.You should not rely on any calculator or tables to compute the bond price in the above equation.When nominal interest rate(5%)is the same as discount rate(5%),the bond is sold at par value.(STOP:This is the fourth important concept in bond accounting,yo

47、u must understand before you go on)How much will this bond sell for?-sold at premiumLet us assume the previous bonds discount rate is 8%(that is,it is less riskier than in the previous slide to lend to the company so a lower discount rate is used).Then the bond price is=50/(1+4%)+50/(1+4%)2+50/(1+4%

48、)3+50/(1+4%)4+50/(1+4%)10+1000/(1+4%)10=$50*8.11081+$1,000*0.675562=$1,0811 Stickney and Weil page 855,4%at n=102 Stickney and Weil page 853,4%at n=10Premium=$1,081 1,000=$81When bond price is more than bond par value,we say it is sold at premium.How much will this bond sell for?-sold at discountLet

49、 us assume the previous bonds discount rate is 12%(that is,it is more riskier than in the previous two slide to lend to the company so a higher discount rate is used).Then the bond price is=50/(1+6%)+50/(1+6%)2+50/(1+6%)3+50/(1+6%)4+50/(1+6%)10+1000/(1+6%)10=$50*7.36009*+$1,000*0.55839*=$926*Stickne

50、y and Weil page 855,6%at n=10*Stickney and Weil page 853,6%at n=10Discount=$1,000 926=$74When bond price is less than bond par value,we say it is sold at discount.How much will this bond sell for?-summarySold at premiumSold at parSold at discountNominal Interest rate10%10%10%Discount rate8%10%12%Bon