financial statements and cash flow

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1、CHAPTER2FinancialStatementsandCashFlowInFebruary2006,CBSRecordsjoinedothercompaniesprobablythelargestinhistory.Themediagianttookinannouncingoperatingresultsforthelatestquarter.achargeof$45.5billioninthefourthquarterof2002.ForCBS,thenewswasnotgood:EarningsamountedThisenormouswrite-offfollowedan

2、earlier,evenlargertoalossof$6pershare.Includedintheearningsfigurechargeof$54billionearlierintheyear.wasachargeofabout$9.4billiontowritedowntheSodidstockholdersinCBSRecordslose$9.4billionvalueofthecompany’sradioandtelevisionbusinesses.inonequarterastheresultofthewrite-off?FortunatelyThewrite-off

3、wasnothingnewtoCBS.Thecompanylostforthem,theanswerisprobablynot.Understandingover$18billion(orabout$11pershare)inthesamewhyleadsustothemainsubjectofthischapter:thatquarterofthepreviousyear,duemostlytowrite-offsinall-importantsubstanceknownascashflow.itsradiostationandoutdooradvertisingbusinesse

4、s.Thewrite-offsbyCBSwerelarge,buttheypaleincomparisontothosetakenbyTimeWarner,whichwere2.1TheBalanceSheetThebalancesheetisanaccountantssnapshotofafirmsaccountingvalueonaparticulardate,asthoughthefirmstoodmomentarilystill.Thebalancesheethastwosides:Ontheleftaretheassetsandontherightaretheliabilit

5、iesandstockholdersequity.Thebalancesheetstateswhatthefirmownsandhowitisfinanced.Theaccountingdefinitionthatun-derliesthebalancesheetanddescribesthebalanceis:Assets
Liabilities
StockholdersequityWehaveputathree-lineequalityinthebalanceequationtoindicatethatitmustalwayshold,bydefinition.Infact,thest

6、ockholdersequityisdefinedtobethedifferencebetweentheassetsandtheliabilitiesofthefirm.Inprinciple,equityiswhatthestockholderswouldhaveremainingafterthefirmdischargeditsobligations.Table2.1givesthe2007and2006balancesheetforthefictitiousU.S.CompositeCor-poration.Theassetsinthebalancesheetarelistedino

7、rderbythelengthoftimeitnormallyTwoexcellentsourcesforcompanyfinancialwouldtakeanongoingfirmtoconvertthemintocash.Theassetsidedependsonthenatureinformationareofthebusinessandhowmanagementchoosestoconductit.Managementmustmakedeci-finance.yah