Finman Lesson 1 PDF

FINMAN LESSON 1 Tangible Assets - asset that has a physical form. Includes both fixed assets such as machinery, Sales - activity related to selling or the amount of buildings and land. g...

FINMAN LESSON 1 Tangible Assets - asset that has a physical form. Includes both fixed assets such as machinery, Sales - activity related to selling or the amount of buildings and land. goods or services sold in a given time period. Intangible Assets - intangible assets such as Revenue - amount of money that a company actually patents, trademarks, copyrights, goodwill and brand receives during a specific period, including discounts recognition. and deductions for returned merchandise. Accounts Receivable - balances of money due to a Cost of Good Sold - direct costs attributable to the firm for goods or services that have been delivered or production of goods sold in a company. Includes the used but not yet paid by customers. good along with direct labor costs used to produce the good. Accounts Payable - an accounting entry that represents a company’s obligation to pay off a Cash on Hand - amount of money in the form of cash short-term debt to its creditors or suppliers. Refers to that company has after it has paid all its costs. a business department or division that is responsible for making payments owed by the company to Inventory - array of finished good/s used in suppliers and other creditors. production held by a company. It serves as a buffer between manufacturing and order fulfillment. Notes Payable - written promissory note. An agreement whereby a borrower obtains a specific Assets - business asset is a piece of property or amount of money from a lender and promises to pay it equipment purchased exclusively or primarily for back with interest over a predetermined time period. business use. (e.g. non current, short-term, long-term, operating, capitalized, tangible and intangible) Accruals - earned revenue and incurred expenses that have an overall impact on an income statement. Current Assets - account that represents the value of all assets that can reasonably expect to be converted Long Term Debt - consists of loans and financial into cash within a year. (e.g. cash, cash equivalents, obligations lasting over one year. A/R, inventory, marketable, securities, prepaid expenses) Common Stock - security that represents ownership in a corporation. Non-current Assets - long term investments where the full value will not be realized within the accounting Retained earnings - net earnings after dividends that year. (e.g. investments, patents, property, plant, are available reinvestment in the company’s core equipment) business or to pay down its debt. Short Term Asset - asset that is to be sold, converted Liabilities - company’s legal financial debts or to cash, or liquidated to pay for liabilities within a one obligations that arise during the course of business year. operations. (e.g. loans, accounts payable, mortgages, deferred revenues and accrued expenses) Long Term Asset - non current assets that are not intended to be turned into cash or be consumed within Equity - value of an asset less the amount of all one year (e.g. investments, property, plant, liabilities on the asset. equipment, intangible assets) Depreciation - accounting method of allocating the Operating Assets - assets acquired for use in the cost of a tangible asset over its useful life and is used conduct of the ongoing operations of a business, to account for declines in value over time. needed to generate revenue (e.g. cash, prepaid expenses, A/R) Amortization - accounting technique used to lower the cost value of a finite life or intangible asset Capitalized Assets - record a cost/expense on the incrementally through scheduled charges to income. balance sheet for the purpose of delaying full recognition of the expense. It is beneficial as Interest Expenses - non operating expense shown companies acquiring new assets with long-term life on the income statement spans can amortize the costs. Net Income - equal to net earnings (profit) calculated as sales less COGS, SG&A, operating expenses, depreciation, interest, taxes and other expenses. SGA (SGA, SAG or SGNA) Selling, General and Administrative Expenses - a major non-production cost presented in an income statement. Interest paid - tax deductible for corporations but usually not for individuals interest Interest earned - usually fully taxable Dividends paid - paid out of after tax income Tax Loss Carry-Back and Carry-Forward - since corporate incomes can fluctuate widely, the Tax Code allows firms to carry losses back to offset profits in previous years or forward to offset profits in the future. Capital Gains - profits from the sale of assets not normally transacted in the normal course of business. Capital Gains (individual) - generally taxed as ordinary income if held for a year or less, and at the capital gains rate if held for more than a year.