FIN301 Class Web Page, Fall ' 21

Instructor: Maggie Foley

Jacksonville University

 

The Syllabus 

Business Finance Online, an interactive learning tool for the Corporate Finance Student http://www.zenwealth.com/BusinessFinanceOnline/index.htm

 

Weekly SCHEDULE, LINKS, FILES and Questions

Chapter

Coverage, HW, Supplements

-        Required

References

 

Chapter 1, 2

 

Marketwatch Stock Trading Game (Pass code: havefun)

Use the information and directions below to join the game.

1.      URL for your game: 
https://www.marketwatch.com/game/fin301-21fall

 

2.   Password for this private game: havefun

3.      Click on the 'Join Now' button to get started.

4.      If you are an existing MarketWatch member, login. If you are a new user, follow the link for a Free account - it's easy!

5.      Follow the instructions and start trading!

 

Discussion: How to pick stocks (finviz.com)

 

How To Win The MarketWatch Stock Market Game

 

Daily earning announcement: http://www.zacks.com/earnings/earnings-calendar

IPO schedule: http://www.marketwatch.com/tools/ipo-calendar

image001.jpg

 

 

Chapter 1: Introduction

 

ppt

 

 

 Note:

Flow of funds describes the financial assets flowing from various sectors through financial intermediaries for the purpose of buying physical or financial assets.

*** Household, non-financial business, and our government

 

Financial institutions facilitate exchanges of funds and financial products.

*** Building blocks of a financial system. Passing and transforming funds and risks during transactions.

*** Buy and sell, receive and deliver, and create and underwrite financial products.

*** The transferring of funds and risk is thus created. Capital utilization for individual and for the whole economy is thus enhanced.

 

The factors that could cause the next financial crisis are (based on class discussion)

      Pandemic

      Global warming

      War

      Inflation

      QE

      student loan

      government debt

      tax reform

 

 

Chapter 2 Introduction of Financial Market

 

ppt

 

1.     What are the six parts of the financial markets

Money:

       To pay for purchases and store wealth (fiat money, fiat currency)

Financial Instruments:

       To transfer resources from savers to investors and to transfer risk to those best equipped to bear it.

Financial Markets:

       Buy and sell financial instruments

       Channel funds from savers to investors, thereby promoting economic efficiency

       Affect personal wealth and behavior of business firms. Example?

Financial Institutions.

       Provide access to financial markets, collect information & provide services

       Financial Intermediary: Helps get funds from savers to investors

Central Banks

       Monitor financial Institutions and stabilize the economy

Regulatory Agencies

       To provide oversight for financial system.

 

2.     What are the five core principals of finance

  • Time has value
  • Risk requires compensation
  • Information is the basis for decisions
  • Markets determine prices and allocation resources
  • Stability improves welfare

 

Introduction to Capital Markets - ION Open Courseware (Video)

How the stock market works (video)

 

No homework for chapters 1, 2

 

 

8/17 Class video: syllabus and market watch game

8/19 class video: chapters 1, and 2, discussion on factors for next financial crisis

 

8/24 Class video: TVM Math and Excel, chapter 5 In class exercise-1

8/26 class video: chapter 5 In class exercise-2

 

8/31 Class video: chapter 5 In class exercise-3

9/2 class video: chapter 5 homework review

 

9/7 Class video: chapter 5 homework; Chapter 3 balance sheet, income statement

9/9 class video: chapter 3 cash flow statement part 1

 

9/14 Class video: chapter 3 cash flow statement part 2, chapter 4- ratio analysis

9/16 class video: Chapter 3 In class exercise

 

9/21 Class video

      Chapter 3 homework

      First midterm exam Review chapter 5

      Study guide posted

9/23 class video:

      first midterm exam review chapter 3

      ratio analysis (not covered in the exam)

 

9/28 Class video First midterm exam (in class)

9/30 class video

      Chapter 6 Boeing, Apple, Dell Stock prices

      Normal distribution

       Mean, Standard Deviation

 

 

10/5 Class video

      Correlation matrix

      beta

10/7 class video

Slope function to get beta

      CAPM

 

10/12 Class video

      Chapter 6 Homework

10/14 class video

      Chapter 7

 

10/19 Class video: chapter 7 homework

10/21 class video: Review for exam

 

10/26 Class video Second midterm exam in class (chapters 6 and 7 only)

10/28 class video Chapter 8 stock valuation, HW questions 1-2

 

11/2 Class video: Chapter 8 HW questions, chapter 9 WACC

11/4 Class video: WACC, and chapter 10 capital budgeting

 

11/9 Class video

      chapter 10 capital budgeting

      homework

11/11 Class video: Third midterm exam review (chapters 8, 9, 10)

 

11/16 Class video Third midterm exam in class (chapters 8, 9, 10)

11/18 Class video Review for final

 

11/19, 12-2:30 PM, Final Exam in class - Comprehensive Exam

Comprehensive Final Exam Study Guide

Multiple Choice Questions: 2.1 points each, total 100 points.)

1.     Given net income, depreciation, changes in AR, AP, and inventory, calculate the company's change in cash from operation.

2-5 Concept about income statement, balance sheet

6.     Calculate ROE. ROE = NI/TE. So look for NI, and TE. Hint: TE = TA TD

7.     Given EBIT, interest, tax rate, EBIT, calculate NI

8.     Given CA, CL in two continuous years, calculate changes in NWC

9.     Examples of use of cash

10-11             . Given PV, r, nper, calculate for FV

12.  Given PV, r, nper, calculate FV (hint: no pmt)

13.  Given FV, r, nper, calculate PV (hint: no pmt)

14.  Given PV, r, nper, calculate FV (hint: no pmt)

15.  Given FV, r, nper, pmt, calculate PV

16.  Given PV, FV, nper, no pmt, calculate for rate

17.  Given PV, rate (hint: if monthly, dividend by 12), pmt, calculate for nper (hint: FV=0)

18-19: What is systematic risk? Unsystematic risk?

20. How to diversify to achieve the goal for diversification?

21. Given beta, r of stock A, beta and r of stock B, calculate market return

22. Given beta, r of stock A, beta and r of stock B, calculate risk free rate

23. Given beta, r of stock A, beta and r of stock B, and given stock Cs beta, calculate its return

24-25. Definition of beta

26-27. Bond conceptual questions

28. Bond: given nper, bond price, yield to maturity, calculate for coupon rate (hint: use pmt function)

29-30. Given nper, bond price, coupon rate, calculate for yield to maturity, for semi-annual coupon bond and annual coupon bond .

31: given D1, g, r, calculate for Po

32: given Do, g, r, calculate for Po

33. Given dividend yield, Po, calculate for D1.

34. Given r, D0, g, calculate for dividend yield

35. Given D0, g, calculate for D5

36. Given Do, g, and r calculate for Po

37-39. Calculate for payback period, NPV, IRR, given CFo CF4 and r.

40-45. Similar to third mid term exam, Amazon question, calculate weight of debt, weight of equity, cost of equity, after tax cost of debt, WACC.

46. Zero coupon bond: given nper, price, calculate for yield to maturity.

47. Calculate return given probability of each state of economy, and return under each state of economy

 

 

 

 

 

 

 

Third Mid-Term Exam, Review video, Review video Examples

Study Guide

 

Multiple Choice Questions (30*3.3)

For questions 1-11, please refer to information given in the following table.

1-11. Given two projects cash flows, calculate NPV, IRR, payback period, crossover rate.

12: Given cash flows, calculate payback period.

13-16. True/false: payback period questions, IRR, and NPV, mutually exclusive vs. independent projects

17. NPV question, might be a hard question. Hint: choose projects based on ranking of NPV, not ranking on IRR.

18. Calculate stock price, given dividend growth rate, D0, and r.

19. Calculate D2, given stock price, D0, and r (hint: calculate g first)

20. Given r, D0, g, calculate dividend yield (hint: dividend yield = r-g)

21. Given Po, D0, g, calculate r

22. Given r, D1, g, calculate Po.

23. Given Po, D1, g, calculate r.

24. Given r, D1, g, calculate D4

25-30. Given total capital requirements, capital raised in the bond market, coupon rate, bond price, years to maturity, flotation rate, tax rate, dividend, dividend growth rate, stock price, flotation rate. Calculate cost of debt, weight of debt, cost of equity, weight of equity, WACC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 5 Time value of Money

ppt

The time value of money - German Nande (video)

 

Tutoring of Time Value of Money calculation in Excel video

 

 

Chapter 5 in class exercise

 

 

Chapter 5 Homework (due with first mid term)

 

1.     You deposit $5,000 in a saving account at 10% compounded annually. How much is your first year interest? How much is your second year interest? (500, 550)

 

2.     What is the future value of $5,000 invested for 3 years at 10% compounded annually? ( 6,655)

 

3.     You just bought a TV for $518.4 on credit card. You plan to pay back of $50 a month for this credit card debt. The credit card charges you 12% of interest rate on the monthly basis. So how long does it take to pay back your credit card debt? (11 months)

 

4.     You are going to deposit certain amount in the next four years. Your saving account offers 5% of annual interest rate.

First year: $800

Second year: $900

Third year: $1000

Fourth year: $1200.

How much you can withdraw four years later? (4168.35)

 

5.     You are going to deposit certain amount in the next four years. Your saving account offers 5% of annual interest rate.

First year: $800

Second year: $900

Third year: $1000

Fourth year: $1200.

How much is the lump sum value as of today (NPV)? (3429.31)

 

6.     Ten years ago, you invested $1,000. Today it is worth $2,000. What rate of interest did you earn? (7.18%)

 

7.     At 5 percent interest, how long would it take to triple your money? (22.52)

 

8.     What is the effective annual rate if a bank charges you 12 percent compounded monthly? (12.68%)

 

9.     Your father invested a lump sum 16 years ago at 8% interest for your education. Today, that account worth $50,000.00. How much did your father deposit 16 years ago? ($14594.50)

 

10.  You are borrowing $300,000 to buy a house. The terms of the mortgage call for monthly payments for 30 years at 3% interest. What is the amount of each payment?  ($1264.81)

 

11.  You deposit $200 at the beginning of each month into your saving account every month. After two years (24 deposits total), your account value is $6,000. Assuming monthly compounding, what is your monthly rate that the bank provides? (1.74%)

 

12.  You want to buy a fancy car. For this goal, you plan to save $5,500 per year, beginning immediately. You will make 4 deposits in an account that pays 8% interest. Under these assumptions, how much will you have 4 years from today? ($26,766)

 

13.  Your girlfriend just won the Florida lottery. She has the choice of $40,000,000 today or a 20-year annuity of $2,850,000, with the first payment coming one year from today. If the mutual fund of hers provides 4% of return each year for the next 20 years, which payment option is more attractive to her? ($40million)

14.  The Thailand Co. is considering the purchase of some new equipment. The quote consists of a quarterly payment of $4,740 for 10 years at 6.5 percent interest. What is the purchase price of the equipment? ($138,617.88)

15.  Today, you are purchasing a 15-year, 8 percent annuity at a cost of $70,000. The annuity will pay annual payments. What is the amount of each payment? ($8,178.07)

16.  Shannon wants to have $10,000 in an investment account three years from now. The account will pay 0.4 percent interest per month. If Shannon saves money every month, starting one month from now, how much will she have to save each month? ($258.81)

17.  Trevor's Tires is offering a set of 4 premium tires on sale for $450. The credit terms are 24 months at $20 per month. What is the interest rate on this offer? (6.27 percent)

18.  Top Quality Investments will pay you $2,000 a year for 25 years in exchange for $19,000 today. What interest rate are you earning on this annuity? (9.42 percent)

19.  You have just won the lottery! You can receive $10,000 a year for 8 years or $57,000 as a lump sum payment today. What is the interest rate on the annuity? (8.22 percent)

20.  Around Town Movers recently purchased a new truck costing $97,000. The firm financed this purchase at 8.25 percent interest with monthly payments of $2,379.45. How many years will it take the firm to pay off this debt? (4.0 years)

21.  You just received a credit offer in an email. The company is offering you $6,000 at 12.8 percent interest. The monthly payment is only $110. If you accept this offer, how long will it take you to pay off the loan? (82.17 months)

22.  What is the future value of weekly payments of $25 for six years at 10 percent? ($10,673.90)

23.  At the end of this month, Bryan will start saving $80 a month for retirement through his company's retirement plan. His employer will contribute an additional $.25 for every $1.00 that Bryan saves. If he is employed by this firm for 25 more years and earns an average of 11 percent on his retirement savings, how much will Bryan have in his retirement account 25 years from now? ($157,613.33)

 

Summary of math and excel equations

 

Math Equations 

FV = PV *(1+r)^n

PV = FV / ((1+r)^n)

N = ln(FV/PV) / ln(1+r)

Rate = (FV/PV)1/n -1

Annuity: N = ln(FV/C*r+1)/(ln(1+r))

Or N = ln(1/(1-(PV/C)*r)))/ (ln(1+r))

 

EAR = (1+APR/m)^m-1

APR = (1+EAR)^(1/m)*m

 

image002.jpg

 

Excel Formulas 

To get FV, use FV function.   

      =abs(fv(rate, nper, pmt, pv))

 

To get PV, use PV function                           

     = abs(pv(rate, nper, pmt, fv))

 

To get r, use rate function                          

     = rate(nper,  pmt, pv, -fv)

 

To get number of years, use nper function       

     = nper(rate,  pmt, pv, -fv)

 

To get annuity payment, use PMT function

     = pmt(rate, nper, pv, -fv)

 

To get Effective rate (EAR), use Effect function

 = effect(nominal_rate, npery)

 

To get annual percentage rate (APR), use nominal function

 = nominal(effective rate,  npery)

 

NPV NFV calculator(FYI, might be helpful)

www.jufinance.com/nfv

 

 

 

Time Value of Money Calculator

http://www.jufinance.com/tvm/

Chapter 3 Financial Statement Analysis

 

Ppt

 

Experts Explain: Financial Statements (well explained, video)

 

************* Introduction ***************

 

Lets compare Nike with GoPro based on 10K (www.nasdaq.com)

https://www.nasdaq.com/market-activity/stocks/nke/financials

 

Income Statement - Nike

Period Ending:

5/31/2021

5/31/2020

5/31/2019

5/31/2018

Total Revenue

$44,538,000

$37,403,000

$39,117,000

$36,397,000

Cost of Revenue

$24,576,000

$21,162,000

$21,643,000

$20,441,000

Gross Profit

$19,962,000

$16,241,000

$17,474,000

$15,956,000

Operating Expenses

 

 

 

 

Research and Development

--

--

--

--

Sales, General and Admin.

$13,025,000

$13,126,000

$12,702,000

$11,511,000

Non-Recurring Items

--

--

--

--

Other Operating Items

--

--

--

--

Operating Income

$6,937,000

$3,115,000

$4,772,000

$4,445,000

Add'l income/expense items

($14,000)

($139,000)

$78,000

($66,000)

Earnings Before Interest and Tax

$6,661,000

$2,887,000

$4,801,000

$4,325,000

Interest Expense

--

--

--

--

Earnings Before Tax

$6,661,000

$2,887,000

$4,801,000

$4,325,000

Income Tax

$934,000

$348,000

$772,000

$2,392,000

Minority Interest

--

--

--

--

Equity Earnings/Loss Unconsolidated Subsidiary

--

--

--

--

Net Income-Cont. Operations

$5,727,000

$2,539,000

$4,029,000

$1,933,000

Net Income

$5,727,000

$2,539,000

$4,029,000

$1,933,000

Net Income Applicable to Common Shareholders

$5,727,000

$2,539,000

$4,029,000

$1,933,000

 

Balance sheet - Nike

Period Ending:

5/31/2021

5/31/2020

5/31/2019

5/31/2018

Current Assets

 

 

 

 

Cash and Cash Equivalents

$9,889,000

$8,348,000

$4,466,000

$4,249,000

Short-Term Investments

$3,587,000

$439,000

$197,000

$996,000

Net Receivables

$4,463,000

$2,749,000

$4,272,000

$3,498,000

Inventory

$6,854,000

$7,367,000

$5,622,000

$5,261,000

Other Current Assets

$1,498,000

$1,653,000

$1,968,000

$1,130,000

Total Current Assets

$26,291,000

$20,556,000

$16,525,000

$15,134,000

Long-Term Assets

 

 

 

 

Long-Term Investments

--

--

--

--

Fixed Assets

$8,017,000

$7,963,000

$4,744,000

$4,454,000

Goodwill

$242,000

$223,000

$154,000

$154,000

Intangible Assets

$269,000

$274,000

$283,000

$285,000

Other Assets

--

--

--

--

Deferred Asset Charges

$2,921,000

$2,326,000

$2,011,000

$2,509,000

Total Assets

$37,740,000

$31,342,000

$23,717,000

$22,536,000

Current Liabilities

 

 

 

 

Accounts Payable

$9,205,000

$7,588,000

$7,851,000

$5,698,000

Short-Term Debt / Current Portion of Long-Term Debt

$2,000

$251,000

$15,000

$342,000

Other Current Liabilities

$467,000

$445,000

--

--

Total Current Liabilities

$9,674,000

$8,284,000

$7,866,000

$6,040,000

Long-Term Debt

$9,413,000

$9,406,000

$3,464,000

$3,468,000

Other Liabilities

$2,931,000

$2,913,000

--

--

Deferred Liability Charges

$2,955,000

$2,684,000

$3,347,000

$3,216,000

Misc. Stocks

--

--

--

--

Minority Interest

--

--

--

--

Total Liabilities

$24,973,000

$23,287,000

$14,677,000

$12,724,000

Stock Holders Equity

 

 

 

 

Common Stocks

$3,000

$3,000

$3,000

$3,000

Capital Surplus

$3,179,000

($191,000)

$1,643,000

$3,517,000

Retained Earnings

--

--

--

--

Treasury Stock

$9,965,000

$8,299,000

$7,163,000

$6,384,000

Other Equity

($380,000)

($56,000)

$231,000

($92,000)

Total Equity

$12,767,000

$8,055,000

$9,040,000

$9,812,000

Total Liabilities & Equity

$37,740,000

$31,342,000

$23,717,000

$22,536,000

 

 

Cash flow statement - Nike

Period Ending:

5/31/2021

5/31/2020

5/31/2019

5/31/2018

Net Income

$5,727,000

$2,539,000

$4,029,000

$1,933,000

Cash Flows-Operating Activities

 

 

 

 

Depreciation

$797,000

$1,119,000

$720,000

$774,000

Net Income Adjustments

$88,000

$72,000

$592,000

$766,000

Changes in Operating Activities

 

 

 

 

Accounts Receivable

($1,606,000)

$1,239,000

($270,000)

$187,000

Changes in Inventories

$507,000

($1,854,000)

($490,000)

($255,000)

Other Operating Activities

($182,000)

($654,000)

($203,000)

$35,000

Liabilities

$1,326,000

$24,000

$1,525,000

$1,515,000

Net Cash Flow-Operating

$6,657,000

$2,485,000

$5,903,000

$4,955,000

Cash Flows-Investing Activities

 

 

 

 

Capital Expenditures

($695,000)

($1,086,000)

($1,119,000)

($1,028,000)

Investments

($3,276,000)

$27,000

$850,000

$1,326,000

Other Investing Activities

$171,000

$31,000

$5,000

($22,000)

Net Cash Flows-Investing

($3,800,000)

($1,028,000)

($264,000)

$276,000

Cash Flows-Financing Activities

 

 

 

 

Sale and Purchase of Stock

$564,000

($2,182,000)

($3,586,000)

($3,521,000)

Net Borrowings

($197,000)

$6,128,000

($6,000)

--

Other Financing Activities

($136,000)

($52,000)

($44,000)

($84,000)

Net Cash Flows-Financing

($1,459,000)

$2,491,000

($5,293,000)

($4,835,000)

Effect of Exchange Rate

$143,000

($66,000)

($129,000)

$45,000

Net Cash Flow

$1,541,000

$3,882,000

$217,000

$441,000

 

 

 

 

For discussion: Which company is better?

 

Lets find it out by comparing stock performance between the two firms.

 

Nike Stock Performance (google.com)

image003.png

 

 

What is your conclusion?

 

 

 

Financial Ratios of Nike (finviz.com)

image005.png

 

 

 ******* Part I: Balance Sheet and Income Statement **************

Home Depot (Ticker in the market: HD) reported the following information for the year ended January 30th, 2011 (expressed in millions).

Sales: $67,977

Cost of goods sold: $44,693

Marketing, general and administrative expenses: $15,885

Depreciation expenses: $1,616

Interest expense: $530

Tax rate: 36.70%

Number of shares outstanding: 1,623

Dividends paid to stockholders: $1,569.

Use the above information to try to prepare the income statement of Home Depot for the year ended January 30th, 2011 

 

Home Depot (Ticker in the market: HD) reported the following information for the year ended January 30th, 2011 (expressed in millions).

Cash: $545

Accounts receivables: $1,085

Inventories: $10625

Other current assets: $1,224

Gross fixed assets: $38,471

Accumulated depreciation: $13,411

Other fixed assets: $1,586

Accounts payable: $9,080

Short term notes payable: $1,042

Long term debt: $11,114

Total common stock: $3,894

Retained earnings: $14,995

Use the above information to try to prepare the balance sheet of Home Depot for the year ended January 30th, 2011

 

Income statement GoPro

 

Period Ending:

12/31/2020

12/31/2019

12/31/2018

12/31/2017

Total Revenue

$891,925

$1,194,651

$1,148,337

$1,179,741

Cost of Revenue

$577,411

$781,862

$786,903

$795,211

Gross Profit

$314,514

$412,789

$361,434

$384,530

Operating Expenses

 

 

 

 

Research and Development

$131,589

$142,894

$167,296

$229,265

Sales, General and Admin.

$219,744

$272,228

$288,100

$318,725

Non-Recurring Items

--

--

--

--

Other Operating Items

--

--

--

--

Operating Income

($36,819)

($2,333)

($93,962)

($163,460)

Add'l income/expense items

($4,881)

$2,492

$4,970

$733

Earnings Before Interest and Tax

($41,700)

$159

($88,992)

($162,727)

Interest Expense

$20,257

$19,229

$18,683

$13,660

Earnings Before Tax

($61,957)

($19,070)

($107,675)

($176,387)

Income Tax

$4,826

($4,428)

$1,359

$6,486

Minority Interest

--

--

--

--

Equity Earnings/Loss Unconsolidated Subsidiary

--

--

--

--

Net Income-Cont. Operations

($66,783)

($14,642)

($109,034)

($182,873)

Net Income

($66,783)

($14,642)

($109,034)

($182,873)

Net Income Applicable to Common Shareholders

($66,783)

($14,642)

($109,034)

($182,873)



Balance sheet - GoPro

Period Ending:

12/31/2020

12/31/2019

12/31/2018

12/31/2017

Current Assets

 

 

 

 

Cash and Cash Equivalents

$327,654

$150,301

$152,095

$202,504

Short-Term Investments

--

$14,847

$45,417

$44,886

Net Receivables

$107,244

$200,634

$129,216

$112,935

Inventory

$97,914

$144,236

$116,458

$150,551

Other Current Assets

$23,872

$25,958

$30,887

$62,811

Total Current Assets

$556,684

$535,976

$474,073

$573,687

Long-Term Assets

 

 

 

 

Long-Term Investments

--

--

--

--

Fixed Assets

$55,271

$89,660

$46,567

$68,587

Goodwill

$146,459

$146,459

$146,459

$146,459

Intangible Assets

$1,214

$5,247

$13,065

$24,499

Other Assets

$11,771

$15,461

$18,195

$37,014

Deferred Asset Charges

--

--

--

--

Total Assets

$771,399

$792,803

$698,359

$850,246

Current Liabilities

 

 

 

 

Accounts Payable

$225,175

$302,485

$284,370

$351,287

Short-Term Debt / Current Portion of Long-Term Debt

--

--

--

--

Other Current Liabilities

$37,518

$24,566

$15,129

$19,244

Total Current Liabilities

$262,693

$327,051

$299,499

$370,531

Long-Term Debt

$218,172

$148,810

$138,992

$130,048

Other Liabilities

$74,516

$83,413

$47,756

$50,962

Deferred Liability Charges

--

--

--

--

Misc. Stocks

--

--

--

--

Minority Interest

--

--

--

--

Total Liabilities

$555,381

$559,274

$486,247

$551,541

Stock Holders Equity

 

 

 

 

Common Stocks

$980,147

$930,875

$894,755

$854,452

Capital Surplus

($650,516)

($583,733)

($569,030)

($442,134)

Retained Earnings

($113,613)

($113,613)

($113,613)

($113,613)

Treasury Stock

--

--

--

--

Other Equity

--

--

--

--

Total Equity

$216,018

$233,529

$212,112

$298,705

Total Liabilities & Equity

$771,399

$792,803

$698,359

$850,246

 

Cash flow statement GoPro

Period Ending:

12/31/2020

12/31/2019

12/31/2018

12/31/2017

Net Income

($66,783)

($14,642)

($109,034)

($182,873)

Cash Flows-Operating Activities

 

 

 

 

Depreciation

$19,065

$26,268

$35,063

$41,478

Net Income Adjustments

$71,007

$51,752

$51,588

$65,482

Changes in Operating Activities

 

 

 

 

Accounts Receivable

$93,084

($71,269)

($16,460)

$52,278

Changes in Inventories

$46,322

($27,778)

$34,093

$16,641

Other Operating Activities

$6,392

$7,486

$35,390

$9,303

Liabilities

($75,305)

$3,739

($73,074)

($39,162)

Net Cash Flow-Operating

$93,782

($24,444)

($42,434)

($36,853)

Cash Flows-Investing Activities

 

 

 

 

Capital Expenditures

($4,881)

($8,348)

($11,004)

($24,061)

Investments

$14,830

$31,119

($231)

($19,036)

Other Investing Activities

($438)

--

$5,000

--

Net Cash Flows-Investing

$9,511

$22,771

($6,235)

($43,097)

Cash Flows-Financing Activities

 

 

 

 

Sale and Purchase of Stock

$5,435

$5,574

$5,169

($68,249)

Net Borrowings

$77,501

--

--

$175,000

Other Financing Activities

($6,207)

($6,618)

($6,650)

($12,193)

Net Cash Flows-Financing

$71,977

($1,044)

($1,481)

$88,594

Effect of Exchange Rate

$2,083

$923

($259)

$1,746

Net Cash Flow

$177,353

($1,794)

($50,409)

$10,390

 

GoPro Stock performance (google.com)

image007.png

 

 

 

 

 

Financial Ratios of GoPro (finviz.com)

image009.png

 

 

 

 

Balance Sheet Template

http://www.jufinance.com/10k/bs

 

Income Statement Template

http://www.jufinance.com/10k/is

 

 

Cash flow template

http://www.jufinance.com/10k/cf

 

 

Ratio Analysis (plus balance sheet, income statement)

http://www.jufinance.com/ratio

 

********* Part II: Cash Flow Statement ******************
Cash flow animation
 (video)

 

Here is the cash flow statement of home depot as of 2/2/2014.

 

In Millions of USD (except for per share items)

52 weeks ending 2014-02-02

Net Income/Starting Line

5,385.00

Depreciation/Depletion

1,757.00

Amortization

-

Deferred Taxes

-31

Non-Cash Items

228

Changes in Working Capital

289

Cash from Operating Activities

7,628.00

Capital Expenditures

-1,389.00

Other Investing Cash Flow Items, Total

-118

Cash from Investing Activities

-1,507.00

Financing Cash Flow Items

-37

Total Cash Dividends Paid

-2,243.00

Issuance (Retirement) of Stock, Net

-8,305.00

Issuance (Retirement) of Debt, Net

3,933.00

Cash from Financing Activities

-6,652.00

Foreign Exchange Effects

-34

Net Change in Cash

-565

Cash Interest Paid, Supplemental

639

Cash Taxes Paid, Supplemental

2,839.00

 

Discussion:

1.      What are the three components of cash flow statement?

2.      What does net change in cash mean?

 

 

image021.jpg

 

Now lets learn how to calculate cash changes in each session

Source of cash

  • Decrease in an Asset
    • Example: Selling inventories or collecting receivables provides cash
  • Increase in Liability or Equity
    • Example: Borrowing funds or selling stocks provides cash

Use of Cash

  • Increase in an Asset
    • Example: Investing in fixed assets or buying more inventories uses cash
    • Decrease in Liability or Equity
    • Example: Paying off a loan or buying back stock uses cash

 Cash Flow from Operations: Five Steps

1.      Add back depreciation.

2.      Subtract (add) any increase (decrease) in accounts receivable.

3.      Subtract (add) any increase (decrease) in inventory.

4.      Subtract (add) any increase (decrease) in other current assets.

5.      Add (subtract) any increase (decrease) in accounts payable and other accrued expenses

 

image021.jpg

 

Chapter 3 HW (due with the first mid-term)

 

1.     Firm AAA just showed how it operated in the prior year.

Sales = $2,000; Cost of Goods Sold = $1,000; Depreciation Expense = $200; Administrative Expenses = $180; Interest Expense = $30; Marketing Expenses = $50; and Taxes = $200. Prepare income statement

2.     A firm has $2000 in current assets, $3000 in fixed assets, $300 in accounts receivables, $300 accounts payable, and $800 in cash. What is the amount of the inventory? (hint: 900)

3.     A firm has net working capital of $1000. Long-term debt is $5000, total assets are $8000, and fixed assets are $5000. What is the amount of the total equity? (Hint: to find total equity, you need to calculate total debt, which is a sum of long term debt and short term debt. Short term can be found from new working capital.) (hint: 1000)

4.     Andre's Bakery has sales of $100,000 with costs of $50,000. Interest expense is $20,000 and depreciation is $10,000. The tax rate is 35 percent. What is the amount of tax paid? (hint: 7000)(hint: tax = taxable income * tax rate and taxable income = EBT)

5.       Andre's Bakery has sales of $100,000 with costs of $50,000. Interest expense is $20,000 and depreciation is $10,000. The tax rate is 35 percent. The company also paid $3,000 for dividend. What is the retained earning?  (hint: retained earning = net income - dividend)(hint: 10,000)

 

 

image023.jpg

 

image024.jpg

 

 

 

 

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Cash Flow Statement Answer

calculation for changes

Cash at the beginning of the year

2060

Cash from operation

net income

3843

plus depreciation

1760

-/+ AR

-807

807

-/+ Inventory

-3132

3132

+/- AP

1134

1134

net change in cash from operation

2798

Cash from investment

-/+ (NFA+depreciation)

-1680

1680

net change in cash from investment

-1680

Cash from finaning

+/- long term debt

1700