What is excluded from comprehensive income
Changes in equity during a period resulting from investments by owners or distributions to owners.
Income (netincome+ discontinued op + (even unrealized trading secur) + OCI (translations + AFS)
ROA, ROE & cash conversion cycle
Netincome/ avg total assets
Net income /avg total assets
Dupont profit margin * asset turn over
Cash conversion cycle
Cash Conversion Cycle
Days Inventory Outstanding+Days Sales Outstanding−Days Payables Outstanding
Current ratio
Current assets/current liabilities
Quick ratio
Cash, cash equivalents + short term mrkt securities + receivables (net)/ current liabilities
No inventory
turn over ratios
AR
Net sales / avg AR (net)
Assets
Net sales / avg assets
Inventory turnover
Gogs/ avg inventory
Debt to equity
Total liabilities/ total equity
Times interest earned
And what is it
EBITDA/ interest expense
measures a company’s ability to cover its interest charges. It uses income before interest and taxes to reflect the amount of income available to cover interest expense
10Q & 10K Deadlines
For large accelerated, accelerated, non accelerated
Large (700M+); 60d 10k 40d 10q
Acce(75-700M); 75d 10k 40d 10q
Non(0-75M); 90d 10k 45d 10q
Supporting & program services activities in NFP
Fundraising
Management and general administration
Membership development
They don’t directly deliver the program
Program activities are the activities for which the organization is chartered. Like labor negotiations
Cost on renovations and upgrades would be capitalized
COGS
Beg(include freight in+ transportation to consigee- discounts) + purchases - end
Or
(1 - gross profit percentage)*sales
It shows the portion of sales that is gross profit.
Or
sales / 1 + markup on sales (% above cost)
It shows how much is added to cost to get the selling price.
WAAE formula and what does it do
Used to calculate capitalized interest
You multiply each expenditure by the portion of the year outstanding
(If occurred evenly)
Sum Expenditure * fraction of year outstanding * interest rate
Step 2
Consider borrowed funds vs WAAE
Borrowed > waae
Capitalize waae amount
Difference use the general rate
Borrowed < waae
Capitalize borrowed
Basic EPS
And what if there is a net loss
Net income - preferred dividends/ W A common shares outstanding ( including contingent shares)
The preferred dividends in the calculation are the ones for the current year, not in arrears
If there is a net loss you add to the loss the preferred dividends
Shows the amount of net income earned for each common share outstanding during a reporting period.
Contingent shares are shares that depend on certain conditions or future events to become issued. Once those conditions are met, these shares are treated as outstanding for basic EPS
Diluted EPS
And how to get to it
1 start with netincome
Net income + after tax tax interest (1- tax rate) +/ W A common shares outstanding + shares issued on conversion of convertible securities (warrants if ITM)
For convertible bonds add back tax interest expense (FV * rate stated)
Than by the tax rate*
(Do not subtract preferred dividends)
Shows the “worst-case” or most conservative earnings per share by assuming all potentially dilutive securities (like convertible bonds, stock options, convertible preferred stock) are converted into common shares. (Smaller eps)
If convertible preferred stock is dilutive and assumed converted, do NOT subtract preferred dividends in the numerator.
The weighted avg purchase price per unit
Beg inventory or purchase outstanding by their corresponding price / total amount of inventory *(COGS)
What is the Treasury Stock Method in EPS calculations? And when is it dilutive
It assumes that option holders exercise their options by paying the exercise price, and the company uses that money to buy back shares at the current market price. The net increase in shares outstanding—the difference between the shares issued on exercise and the shares repurchased—is added to the weighted average shares for diluted EPS
Dilutive when
Mrkt price > exercise price ITM
Days in inventory & AR formula
End inventory/ (cogs/365)
End balance / netsales /365
Adjustments to net-income in cash flow statement
And what not to include
Net income (including NI attributable to both the parent and the non controlling interest)
+Depreciation +Amortization
+Depletion
+Impairment loss
+discount on amortization of bond
DTA(+)(-) & DTL(+)(+)
-Subtract NON cash gains or add back non cash losses (equity in earnings etc)
-gain sale of fixed assets
Don’t include
Dividends paid by the sub to the parent
Valuation of inventory Lower cost market
What is market value
(LIFO)
Median between (replacement cost, ceiling (NRV), floor)
Replacement cost normally given
Ceiling(NRV) = selling price - cost to complete and sell
Floor = ceiling (NRV) - (selling price * normal profit margin)
If normal profit margin is a whole number, subtract that to ceiling
What is Inventory in transit
Shipping FOB shipping point, that has not arrived when financials are issued
Example of net assets with donor restrictions
Are payables net assets with donor restrictions?
Purpose restrictions
(Reports)(right of return of obligation)
Time restrictions
(When to use the money, or money wont be used for a while even thought they are without restrictions)
Pledges or promises to pay money in the future
Permanent restrictions
(Endowment fund requiring principle to be held intact forever with only the earnings used for scholarships)(including income derived from endowment if donor restricted)
Payables are not net assets with donor restrictions
Example of net assets without donor restrictions
General donations
Membership fees
Contributed legal services
Internal board decisions
Exchange transactions
(Payment received in exchange for services provided, like fees for courses or clinical trials (e.g., the university receiving funds from a company for research results).)
When money that was restricted was spent for its intended purpose
BOARD DESIGNATED FUNDS
When should donated services be recognized as revenue and expense in a not-for-profit’s financial statements?
Create or enhance a nonfinancial asset (land building equipment
Or meet SOME
Specialized skill
Otherwise needed
Measurable in value
Easily valued
What do accrued liabilities represent
(Accrued interest)
They represent expenses recognized but not yet paid
Impairment loss formula
BV - (FV- disposal cost)
Or BV - new CV
