BUAD 285b Chapter Notes - Chapter 13: Working Capital, Current Liability, Profit Margin

• School: USC
• Department: Business Administration
• Course: BUAD 285b
• Professor: Thomas Lin

Document Summary

Buad chapter 13 financial analysis: the big picture. Sustainable income: forecasting future cash flows without including irregularities that contribute to this year"s income. Sustainable income = net income - irregular items. Discontinued operations: the gain or loss from the disposal of a significant section of the business (recorded net tax) Extraordinary items: unusual and infrequent, net of taxes. Changes in account principle: management can switch accounting principles if they can prove the new principle is better. Example: inventory costing methods from lifo to fifo. Report the current period and previous periods with the new principle. Comprehensive income: includes changes in stockholders" equity less changes from stockholder investment and distributions to stockholders (unrealized losses or gains) Available-for-sale securities are included in other comprehensive income . Balance sheet: unrealized gains or losses from available-for-sale securities are added or subtracted from stockholders" equity.