pdf to tiff conversion using c# : Add stamp to pdf file control application system azure web page winforms console Welch-ed148-part1837

FromFinancialStatementsto
EconomicCashFlows
TRANSLATINGACCOUNTINGINTOFINANCE
(PRESENTVALUECASHFLOWS)
F
inancialaccountingisthe“languageofbusiness.”Althoughthisbookisnot
about financial statements, youmustunderstandboththeirlogicandtheir
fundamentals.Theycontaininformationaboutthecashflowsyouneedforan
NPVanalysis,aswellasalotofotherusefulinformation.Withoutunderstanding
accounting,youalsocannotunderstandcorporateincometaxes—anecessaryNPV
input.
Thischapterbeginswithasimplehypotheticalproject.Itseconomicsmakecom-
putingNPVeasy.Thechapterthenexplainshowaccountantswould describethe
projectinafinancialstatement.Thismakesiteasyforyoutoseethecorrespondence
betweenthefinanceandtheaccountingdescriptions.Finally,thechapterappliesthe
sameanalysistothefinancialstatementsofarealcorporation,PepsiCo(PEP).
Thischapteralsogentlyintroducessomemoredetailsaboutcorporateincome
taxesandcapitalstructure.TheywillbeexplainedingreaterdetailinChapter17.
13.1 FINANCIALSTATEMENTS
Youalreadyknowthatthevalueofafirmisdeterminedbyitsunderlyingprojects.
Isn’taccountingjustirrelevant
numbers?Isn’twhatmatters
theproject’sactualcashflows,
nomatterhowitisreported?
(YesandNo.)
TheseprojectshavecashflowsthatyouuseinanNPVanalysis.Unfortunately,the
accountingfinancialsdonotcontainthekindofcashflowsthatyouneedforanNPV
analysis.Inadditiontolearninghowtoconvertfinancialsintocashflows,thereare
alsomanyothergoodreasonswhyyoushouldunderstandfinancialstatements:
1. Ifyouwanttohaveanintelligentconversationaboutcorporatefinanceandeco-
nomics,youmustunderstandthelanguageofaccounting.Inparticular,youmust
understandwhatearningsare—andwhattheyarenot.
445
Add stamp to pdf file - C# PDF Annotate Library: Draw, edit PDF annotation, markups in C#.net, ASP.NET, MVC, Ajax, WPF
Draw, Add and Edit Various Annotations on PDF File in C# Programming
add text pdf file; adding text to a pdf
Add stamp to pdf file - VB.NET PDF Annotate Library: Draw, edit PDF annotation, markups in vb.net, ASP.NET, MVC, Ajax, WPF
Guide to Draw, Add and Edit Various Annotations on PDF File in VB.NET Programming
.net read pdf text; adding comments to pdf file
446
CHAPTER13
FROMFINANCIALSTATEMENTSTOECONOMICCASHFLOWS
2. Subsidiariesandcorporationsreportfinancialstatements,designedbyaccoun-
tantsforaccountants.Itistruethattheydonotreporttheexactcashflowsand
cashflowprojectionsthatyouneedforPVdiscounting.Buthowcanyoumake
gooddecisionsaboutwhichprojectstotakeifyoucannotunderstandtheonly
informationtowhichyoumayeverhaveaccessto?
3. Giventhatitmaybealltheinformationyoueverget,youmustbeabletoread
whatthecompanyiswillingtotellyouifyouwanttogetaglimpseoftheopera-
tionsofapubliclytradedcorporationorbetterunderstanditseconomics.Ifyou
wanttoacquireacompany,thecorporatefinancialsmaybeyourprimarysource
ofinformation.
4. TheIRSleviescorporateincometax.Thistaxiscomputedfromatax-specific
variantofthecorporateincomestatement.Itreliesonthesameaccountinglogic
asthepublishedfinancials.(Thereportedpublicandunreportedtaxstatements
areconstructedusingthesameaccountingprinciples.Buttherearedifferences
thataremandatedbytherespectiveregulatoryagencies.)Becauseincometaxes
aredefinitecosts,youmustbeabletounderstandandconstructfinancialstate-
mentsthatproperlysubtracttaxesfromtheprojectedcashflowswhenyouwant
tocomputeNPV.And,ifyoubecomeataxguru,youmayevenlearnhowtostruc-
tureprojectssoastominimizethetaxobligations,althoughmostofthisisbeyond
thescopeofafirstfinancetextbook.
5. Many contracts arewritten n on the basisof financials. For example, a bond
covenantmayrequirethecompanytomaintainacurrentratiogreaterthan1.5.
Evenifachangeinaccountingrulesshouldnotmattertheoretically,suchcon-
tractscaninfluencethereportedfinancialsonyourprojects’cashflows.
6. Thereisnodoubtthatmanagerscareabouttheirfinancialstatements,ifonlybe-
causeexecutivecompensationisoftenlinkedtothenumbersreportedinthem.
Moreover,managerscanengageinmanymaneuverstomanipulatetheirearnings
legally.Forexample,firmscanoftenincreasetheirreportedearningsbychang-
ingtheirdepreciationpolicies(explainedbelow).Companiesarealsoknownto
activelylobbytheaccountingstandardsboardsatgreatexpense.Forexample,in
December2004theaccountingstandardsboardfinallyadoptedamandatoryrule
thatcompaniesmustvalueemployeestockoptionswhentheyaregranted.Un-
til2004,firms’financialstatementscouldtreattheseoptiongrantsasiftheycost
nothing.Thisrulewasadopteddespiteextremelyvigorousoppositionbycorpo-
ratelobbies,whichwasaimedattheaccountingstandardsboardandCongress.
Thereasonisthatalthoughthisnewruledidnotaskfirmstochangeprojects,it
drasticallyreducedthereportednetincome(earnings),especiallyoftechnology
firms.
Whyshouldcompaniescareaboutwhetheroptionscostshavetobesub-
tractedfromreportedearnings?Afterall,companieshaddisclosedenoughin-
formationinthefootnotestoallowinvestorstodeterminethesecoststhemselves.
Thisisabigquestion.Somebehavioralfinanceresearchersbelievethatthefinan-
cialmarketsvaluecompaniesasiftheydonotfullyunderstandcorporatefinancials.
Thatis,notonlydotheysharethecommonbeliefthatfirms“manage”theirearn-
C# PDF Password Library: add, remove, edit PDF file password in C#
This example shows how to add PDF file password with access permission setting. passwordSetting.IsAssemble = true; // Add password to PDF file.
add comments to pdf file; adding text to a pdf form
C# PDF File Compress Library: Compress reduce PDF size in C#.net
All object data. File attachment. Flatten visible layers. C#.NET DLLs: Compress PDF Document. Add necessary references: RasterEdge.Imaging.Basic.dll.
add text to pdf in acrobat; adding comments to pdf in reader
13.1 FINANCIALSTATEMENTS
447
ings,buttheyalsobelievethatthemarketfailstoseethroughevenmechanical
accountingcomputations.
Naturally,thepresumptionthatthefinancialmarketscannotunderstandac-
countingisacontroversialhypothesis.Iftrue,thiscouldleadtoallsortsoftrou-
blesomeconsequences.ValuemaynolongerbejustNPV,butinsteadbebased
partlyonsmokeandmirrors.Forexample,ifthemarketcannotunderstandfi-
nancials,youshouldrealizethatitcouldhaverealshare-priceconsequenceswhen
managers(legally)manipulatetheirearnings.Afirmwould especially benefit
fromahighersharepricewhenitwantstosellmoreofitssharestothepublic.In
thiscase,managerscouldandshouldmaneuvertheirfinancials(legally,ofcourse)
toincreasetheirearningsjustbeforetheequityissue.Thereisgoodevidencethat
firmsdothis—andalsothatthefinancialmarketsareregularlydisappointedby
thesefirms’performancesyearsaftertheirequityissues.
Evenmoretroublesome,thereisalsoevidencethatmanagersprefernotto
takesomepositive-NPVprojectsiftheseprojectswouldharmtheirearnings.
Doesthissoundfar-fetched?Infact,inasurveyof401seniorfinancialexecutives,
Graham,Harvey,andRajgopalfoundthat55%woulddelaystartingaprojectand
80%woulddefermaintenanceandresearchspendinginordertomeetearnings
targets.StartingprojectsanddoingmaintenanceandR&Darepresumablythe
rightkindsof(positive-NPV)projects,sonottakingthemdecreasestheunderly-
ingrealvalueofthefirm—eventhoughitmayincreasethefinancialimageofthe
firm’sprojects.
Itisofcourseimpossibleforanintroductoryfinancetextbooktoexplainallthe
nuancesofaccounting.Instead,wefocushereononlyoneissueofimportanceto
Ourchapter’saccounting
perspective:howtoextract
economiccashflows.
afinancier:HowcanyouobtainthecashflowsthatyouneedforanNPVanalysis,
andwhycanyounotuseearnings?Accountinghas,ofcourse,moretoofferthanjust
this—and,fortunately,youcanlearnmoreaboutitsbroaderscopeinyouraccounting
course.
solvenow!
Q13.1 Althoughaccountingnumbersaresometimesthoughtofasimaginary
presentations,whyisafirmnotjustafirm,andaccountingnumbersnot
just“funnynumbers”?Thatis,whatisthemostimportantdirectcash
flowinfluenceofaccountinginmostcorporations?
13.1A THECONTENTSOFFINANCIALS
Publiclytradedcompaniesreporttheirfinancialresults(orfinancials)infinancial
Companiescommunicatetheir
internaloperationsthrough
standardizedfinancialreports.
reportstotheirshareholdersandtothepublic.Thestandardrulesthatgointoprepar-
ingthepublicfinancialstatementsarecalledGAAP(GenerallyAcceptedAccounting
Principles)andchangerarely.Theyaresetbyanumberofpolicymakers,mostpromi-
nentlyFASB(FinancialAccountingStandardsBoard).Themostimportantfinancial
reportistheannualreport,whichisfiledwiththeSECinForm10-K.(Thereisalso
amuchshorterrequiredquarterlyreport,calleda10-Q.)Almostallannualreports
beginwithageneraldescriptionofthebusinessandbusinessdevelopments,followed
bythemoreformalpresentationofthefirm’sfinancials.Asafinancier,youaremost
C# PDF File Merge Library: Merge, append PDF files in C#.net, ASP.
Add necessary references: using RasterEdge.XDoc.PDF; Note: When you get the error "Could not load file or assembly 'RasterEdge.Imaging.Basic' or any other
add text pdf professional; add text to a pdf document
C# PDF Sticky Note Library: add, delete, update PDF note in C#.net
outputFilePath = Program.RootPath + "\\" Annot_8.pdf"; // open a PDF file PDFDocument doc annot.Position = new PointF(100F, 100F); // add annotation to the
add textbox to pdf file; add text to pdf online
448
CHAPTER13
FROMFINANCIALSTATEMENTSTOECONOMICCASHFLOWS
likelyprimarilyinterestedinthefinancials.Afterall,youcaremoreabouthowmuch
moneythefirmmakesthanabouthowitmakesit.Nevertheless,asmuchasyoumight
liketokeepthefirmablackbox,yourarelycan:Knowledgeof“howmoneyismade”
isusuallynecessaryforgoodknowledgeof“howmuchmoneyismade”and“how
moremoneycanbemade.”
Ifyouhavenotseenanannualreport(withfinancialstatements),pleasespend
Youmustreadsome
samples—please!
sometimereading one. Most largecorporationspublish their financialsontheir
websites,soaccessiseasy.Ifyouownsharesofstockinapubliclytradedcompany,the
annualreportisalsoautomaticallymailedtoyou.Moreover,theSECrunsEDGAR
acomprehensiveelectronicrepositoryofcorporatefinancials,includingannualand
quarterlyreports.
13.1B PEPSICO’SFINANCIALS
Tables13.1–13.4containthefinancialstatementsthatPepsiCoreportedinits2001
WelookatPepsiCofinancials.
annualreport.(Theentireannualreportisavailableathttp://www.pepsico.com/PEP_
Investors/AnnualReports/01/pepsico_annual2001.pdf.)Ifyouarewonderingwhywe
areusingsucholdstatements, thereisagoodreason.Itwill allowustotrackin
Chapter20what actually happened to PepsiCoinsubsequent years. Inany case,
nothingmajorhaschangedintheaccountingrulessince2001,soeveryprinciplein
thesestatementsremainsapplicabletoday.
Everyfinancialreporthasfourmainstatements:
Thefinancialstatements:
balancesheet,income
statement,cashflow
statement,andthe
relativelylessimportant
equitystatement.
ThebalancesheetinTable13.1providesasnapshotofthefirm’sassetsandliabilities
atafixedpointintime.(Itisameasureof“stock,”notof“flow”overaninterval.)
Someassets(mostlycashandsecurities,accountsreceivable,andinventories)
areclassifiedascurrentassets.Theideaisthattheseassetswillconvertintocash
withinoneyearorless.Theyarethusshortterminnatureandareusedbythefirm
tofunditsday-to-dayoperations.Theyarealsooften(butnotalways)fairlyeasyto
liquidateincaseofdistress.Currentassetscontrastwithotherassetssuchasplants
orbrandreputation(anintangibleasset),whichareexpectedtogeneratecashover
morethanoneyear.Noncurrentassetsareoftenmuchhardertoconvertintocold,
hardcashifthefirmneedsmoneyquickly.
Asinfinance, accountingforcesthesumtotalofallassetstobeownedby
creditorsandshareholders.And,aswithassets,somecreditorsareowedmoney
overthe shortterm. Theseare calledcurrentliabilities.Noncurrentliabilities
includeotherdebtthatismorelongterm.Andthenthereareobligationstoour
“friend,”theIRS.Theremainder—whateverassetsarenotaccountedforbydebt
owedtocreditors—iscalledequity.Therefore,
Assets=Liabilities+Shareholders’Equity
Ifallassetsandliabilitiesareproperlyvalued,thisaccountingbookvalueofshare-
holders’equitywouldbethemarketvalue,too.However,accountingrulesand
difficultiesinvaluingassetsandliabilitiesoftenrenderthebookvalueofshare-
holders’equityintomoreofa“plug-in”numberthatservestoequalizeassetsand
liabilitiesthananintrinsicallymeaningfulfigure.Youhavebeenwarned!
C# PDF Library SDK to view, edit, convert, process PDF file for C#
PDF SDK for .NET allows you to read, add, edit, update, and delete PDF file metadata, like Title, Subject, Author, Creator, Producer, Keywords, etc.
add notes to pdf; adding comments to a pdf document
C# PDF Convert to HTML SDK: Convert PDF to html files in C#.net
by converting PDF document file into HTML webpage. How to Use C#.NET Demo Code to Convert PDF Document to HTML5 Files in C#.NET Class. Add necessary references:
add text boxes to pdf; adding text to pdf file
13.1 FINANCIALSTATEMENTS
449
TABLE13.1 ConsolidatedBalanceSheet,PepsiCo,Inc.andSubsidiaries
December29,2001,andDecember30,2000
(inmillionsexceptpershareamounts)
2001
2000
ASSETS
CurrentAssets
1
Cashandcashequivalents
$683
$1,038
2
Short-terminvestments,atcost
966
467
3
1,649
1,505
4
Accountsandnotesreceivable,net
2,142
2,129
5
Inventories
1,310
1,192
6
Prepaidexpensesandothercurrentassets
752
791
7
TotalCurrentAssets
5,853
5,617
8
Property,PlantandEquipment,net
6,876
6,558
9
IntangibleAssets,net
4,841
4,714
10
InvestmentsinUnconsolidatedAffiliates
2,871
2,979
11
OtherAssets
1,254
889
12
TotalAssets
$21,695
$20,757
LIABILITIESANDSHAREHOLDERS’EQUITY
CurrentLiabilities
13
Short-termborrowings
$354
$202
14
Accountspayableandothercurrentliabilities
4,461
4,529
15
Incometaxespayable
183
64
16
TotalCurrentLiabilities
4,998
4,795
17
Long-TermDebt
2,651
3,009
18
OtherLiabilities
3,876
3,960
19
DeferredIncomeTaxes
1,496
1,367
20
PreferredStock,noparvalue
26
49
21
DeferredCompensation—Preferred
(27)
CommonShareholders’Equity
22
Commonstock,parvalue1
2
3
cpershare
30
34
(issued1,782and2,029shares,respectively)
23
Capitalinexcessofparvalue
13
375
24
Deferredcompensation
(21)
25
Retainedearnings
11,519
16,510
26
Accumulatedothercomprehensiveloss
(1,646)
(1,374)
27
Less:repurchasedcommonstock,atcost
(1,268)
(7,920)
(26and280shares,respectively)
28
TotalCommonShareholders’Equity
8,648
7,604
29
TotalLiabilitiesandShareholders’Equity
$21,695
$20,757
Seeaccompanyingnotestoconsolidatedfinancialstatements.
Reprintedwithpermission.
C# PDF bookmark Library: add, remove, update PDF bookmarks in C#.
Help to add or insert bookmark and outline into PDF file in .NET framework. Ability to remove and delete bookmark and outline from PDF document.
add comments to pdf; add editable text box to pdf
C# PDF Page Delete Library: remove PDF pages in C#.net, ASP.NET
from PDF file. C#.NET Project DLLs for Deleting PDF Document Page. In order to run the sample code, the following steps would be necessary. Add necessary
.net extract text from pdf; adding text to pdf in reader
TABLE13.2 Consolidated d StatementofCommon Shareholders’ Equity, , PepsiCo, Inc. . and
Subsidiaries
FiscalyearsendedDecember29,2001,December30,2000,andDecember25,1999
2001
2000
1999
(inmillions)
Shares Amount t Shares Amount Shares s Amount
CommonStock
Balance,beginningofyear
2,029
$34
2,030
$34
2,037
34
Sharerepurchases
(9)
(13)
Stockoptionexercises
6
Quakerstockoptionexercises
3
8
6
Sharesissuedtoeffectmerger
(256)
(4)
0
Balance,endofyear
1,782
30
2,029
34
2,030
34
CapitalinExcessofParValue
Balance,beginningofyear
375
559
904
Sharerepurchases
(236)
(370)
Stockoptionexercises
a
82
52
(21)
Reissuedshares
150
Sharesissuedtoeffectmerger
(595)
Other
1
46
Balance,endofyear
13
375
559
DeferredCompensation
Balance,beginningofyear
(21)
(45)
(68)
Netactivity
21
24
23
Balance,endofyear
(21)
(45)
RetainedEarnings
Balance,beginningofyear
16,510
14,921
13,356
Netincome
2,662
2,543
2,505
Sharesissuedtoeffectmerger
(6,644)
Cashdividendsdeclared—common
(1,005)
(950)
(936)
Cashdividendsdeclared—preferred
(4)
(4)
(4)
Balance,endofyear
11,519
16,510
14,921
AccumulatedOtherComprehensiveLoss
Balance,beginningofyear
(1,374)
(1,085)
(1,139)
Currencytranslationadjustment(CTA)
(218)
(289)
(136)
CTAreclassificationadjustment
175
Cashflowhedges,netoftax:
Cumulativeeffectofaccountingchange
3
Derivative(losses)/gains,net
(21)
Minimumpensionliabilityadjustment,netoftax
(38)
(2)
17
Other
2
2
(2)
Balance,endofyear
(1,646)
(1,374)
(1,085)
RepurchasedCommonStock
Balance,beginningofyear
(280)
(7,920) (271) ) (7,306)
(255) (6,535)
Sharesrepurchased
(35)
(1,716)
(38)
(1,430)
(36)
(1,285)
Stockoptionexercises
20
751
29
816
20
514
Reissuedshares
13
374
—-
Sharesissuedtoeffectmerger
256
7,243
Balance,endofyear
(26)
(1,268) (280)
(7,920) (271)
(7,306)
TotalCommonShareholders’Equity
$8,648
$7,604
$7,078
a.Includestotaltaxbenefitof$212in2001,$177in2000and$105in1999.
Seeaccompanyingnotestoconsolidatedfinancialstatements.Theseincludeaclosingstockpriceof$49.05/share,whichindicatesamarket
capitalizationof$87.4billion.
C# PDF Convert to Tiff SDK: Convert PDF to tiff images in C#.net
file quality. Both single page and multi-page Tiff image files are acceptable. Use C#.NET DLLs and Demo Code to Convert PDF to Tiff in C#.NET Program. Add
add text to pdf document online; adding text to a pdf in acrobat
TABLE13.3 ConsolidatedStatementofIncome,PepsiCo,Inc.andSubsidiaries
FiscalyearsendedDecember29,2001,December30,2000,andDecember25,1999
(inmillionsexceptpershareamounts)
2001
2000
1999
NETSALES
1
NewPepsiCo
$26,935
$25,479
$22,970
2
Bottlingoperations
2,123
3
TotalNetSales
26,935
25,479
25,093
COSTSANDEXPENSES
4
Costofsales
10,754
10,226
10,326
5
Selling,generalandadministrativeexpenses
11,608
11,104
11,018
6
Amortizationofintangibleassets
165
147
193
7
Merger-relatedcosts
356
8
Otherimpairmentandrestructuringcharges
31
184
73
9
TotalCostsandExpenses
22,914
21,661
21,610
OPERATINGPROFIT
10
NewPepsiCo
$4,021
$3,818
$3,430
11
Bottlingoperations
2,123
12
TotalOperatingProfit
$4,021
$3,818
$3,483
13
Bottlingequityincomeandtransactiongains/(loss),net
160
130
1,083
14
Interestexpense
(219)
(272)
(421)
15
Interestincome
67
85
130
(netinterestincomeissumofprecedingthreeitems)
=8
=−57
=792
16
INCOMEBEFOREINCOMETAXES
4,029
3,761
4,275
17
PROVISIONFORINCOMETAXES
1,367
1,218
1,770
18
NETINCOME
$2,662
$2,543
$2,505
NETINCOMEPERCOMMONSHARE
19
Basic
$1.51
$1.45
$1.41
20
Diluted
$1.47
$1.42
$1.38
Seeaccompanyingnotestoconsolidatedfinancialstatements.
Reprintedwithpermission.
452
CHAPTER13
FROMFINANCIALSTATEMENTSTOECONOMICCASHFLOWS
TABLE13.4 ConsolidatedStatementofCashFlows,PepsiCo,Inc.andSubsidiaries
FiscalyearsendedDecember29,2001,December30,2000,andDecember25,1999
(inmillions)
52Weeks
53Weeks
52Weeks
Ending
Ending
Ending
12/29/01
12/30/00
12/25/99
CashFlows—OperatingActivities
1
Netincome
$2,662
$2,543
$2,505
Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities
2
Bottlingequityincome,net
(160)
(130)
(1,083)
3
Depreciationandamortization
1,082
1,093
1,156
4
Merger-relatedcosts
356
5
Otherimpairmentandrestructuringcharges
31
184
73
6
Cashpaymentsformerger-relatedcostsandrestructuringcharges
(273)
(38)
(98)
7
Deferredincometaxes
162
33
73
8
Deferredcompensation—ESOP
48
36
32
9
Othernoncashchargesandcredits,net
209
303
368
Changesinoperatingworkingcapital,excludingeffectsofacquisitionsanddispositions
10
Accountsandnotesreceivable
7
(52)
(141)
11
Inventories
(75)
(51)
(202)
12
Prepaidexpensesandothercurrentassets
(6)
(35)
(209)
13
Accountspayableandothercurrentliabilities
(236)
219
357
14
Incometaxespayable
394
335
274
15
Netchangeinoperatingworkingcapital
84
416
79
16
NetCashProvidedbyOperatingActivities
4,201
4,440
3,605
CashFlows—InvestingActivities
17
Capitalspending
(1,324)
(1,352)
(1,341)
18
Acquisitionsandinvestmentsinunconsolidatedaffiliates
(432)
(98)
(430)
19
Salesofbusinesses
33
513
20
Salesofproperty,plant&equipment
57
130
Short-terminvestments.byoriginalmaturity
21
Morethanthreemonths—purchases
(2,537)
(4,950)
(2,209)
22
Morethanthreemonths—payments
2,078
4,585
2,220
23
Threemonthsorless,net
(41)
(9)
12
24
Other,net
(381)
(262)
(67)
25
NetCashUsedforInvestingActivities
(2,637)
(1,996)
(1,172)
(Continuedonthefollowingpage)
13.1 FINANCIALSTATEMENTS
453
TABLE13.4(continued)
(inmillions)
52Weeks
53Weeks
52Weeks
Ending
Ending
Ending
12/29/01
12/30/00
12/25/99
CashFlows—FinancingActivities
26
Proceedsfromissuancesoflong-termdebt
324
130
3,480
27
Paymentsoflong-termdebt
(573)
(879)
(1,216)
Short-termborrowings,byoriginalmaturity
28
Morethanthreemonths—proceeds
788
198
3,699
29
Morethanthreemonths—payments
(483)
(155)
(2,758)
30
Threemonthsorless,net—payments
(397)
1
(2,814)
31
Cashdividendspaid
(994)
(949)
(935)
32
Sharerepurchases—common
(1,716)
(1,430)
(1,285)
33
Sharerepurchases—preferred
(10)
34
Quakersharerepurchases
(5)
(254)
(382)
35
ProceedsfromissuanceofsharesinconnectionwiththeQuakermerger
524
36
Proceedsfromexercisesofstockoptions
623
690
383
37
NetCashUsedforFinancingActivities
(1,919)
(2,648)
(1,828)
38
EffectofExchangeRateChangesonCashandCashEquivalents
(4)
3
39
Net(Decrease)/IncreaseinCashandCashEquivalents
(355)
(208)
(608)
40
CashandCashEquivalents—BeginningofYear
1,038
1,246
638
41
CashandCashEquivalents—EndofPeriod
$683
$1,038
$1,246
SupplementalCashFlowInformation
42
Interestpaid
$159
$226
$384
43
Incometaxespaid
$857
$876
$689
44
Acquisitions
45
Fairvalueofassetsacquired
$604
$80
$717
46
Cashpaidanddebtissued
(432)
(98)
(438)
47
Liabilitiesassumed
$172
$(18)
$279
454
CHAPTER13
FROMFINANCIALSTATEMENTSTOECONOMICCASHFLOWS
Theowners’equitystatement(or“shareholders’equitystatement”)inTable13.2
explainsthehistoryofcapitaloriginallycontributedtothefirm,andofearnings
thatwereretained(notpaidout).Wewillnotusethisstatementanyfurther.
TheincomestatementinTable13.3reportstherevenuesandexpensesofthecom-
pany,resultinginearnings(alsocallednetincome)overtheyear.(Thus,itreports
measuresof“flows,”notof“stocks.”)
Intheabovethreestatements,accountantsseekto“smoothout”temporaryhiccups—
whichyouwilllearnaboutinamoment.Itisonlyinthefourthstatementthatthisis
notattempted:
ThecashflowstatementinTable13.4reportsthesourcesandusesofcashoverthe
year.(Itisameasureof“flow,”notof“stock.”)
YoushouldstareatthesefourPepsiCostatementsforawhile.Buthoweverhardyou
look,youwillnotbeabletofindanitementitled“cashflowforanNPVanalysis.”
Andthecashflowsonthecashflowstatementlooknothingliketheearnings,which
iswhattheworldseemstoconsiderimportant!Somehow,youmustlearnwhatthese
financialsmeansothatyoucanextractwhatyoureallyneedfromthem:a“cashflow
foranNPVanalysis”fromthefourfinancialstatements.
Forthemostpart,GAAPrulesfocusmoreontheaccuracyofthetwoflowstate-
Themostimportantstatements
aretheincomeandcashflow
statements,notthetwostock
statements.
mentsthanontheaccuracyofthetwostockstatements.(Thebalancesheetdoes
containimportantinformation,butmanyofitsentriesareprecarious.)Fortunately,
thissuitsuswell.Wewillbespendingalotoftimeexplainingtheincomestatement
andcashflowstatement.Theupshotisthatthecashflowstatementcomesclosestto
whatyouwant.However,tounderstandwhyitisinsufficientandwhereitcomesfrom,
youneedtotakeawiderexpeditionintothelogicofaccounting(and,specifically,of
netincome),whichisdifferentfromthelogicoffinance(and,specifically,ofNPV
cashflows).Yournextstepistolearnhowtoread,interpret,andtransformfinancial
statementsintothecashflowsthatanNPVanalysisdemands.Youalsoneedthisex-
peditiontogetabetterunderstandingofearningsandfinancialstatementsingeneral.
13.1C WHYFINANCIERSANDACCOUNTANTSTHINKDIFFERENTLY
Financierstrytounderstandthefirmvaluebyworkingwiththeexacttimingofhard
Earningsanticipatefuture
costsandbenefits(insome
oddsense).
cashinflowsandoutflowsovertheentireproject’slifetime.Likefinanciers,accoun-
tantsareinterestedinfirmvalue.(However, thisisanoversimplification, because
accountingestimatesarealsosubjecttoanumberofconsiderationsthatcantrump
theirdesireforaccuracy—firstandforemost,anexplicitdesiretoremainconservative.
Forexample,entriesonthebalancesheetarerecordedatthelowerofcostormarket
value.Thus,evenifanaccountantknowsthatthevalueishigherthanthecost,she
maynotwanttousethisinformation.Wewillmostlyignoreconservatism,andfocus
onhowwecanuseaccountinginformationforourpurposes.)Unlikefinanciers,ac-
countantsfocusnotjustoneconomiccashflowsbutalsoonannualearnings(aflow
variable).Theseearningstrytoincorporatechangesintheexpectedfutureimmedi-
atelyintothefirm’snetincometoday.
Themaindifferencebetweenthesetwo conceptsofincomeandcashflowsis
Thedifferencebetweenincome
andeconomiccashflowsis
“accruals.”
accruals,whichareeconomictransactionsthathavedelayedcashimplications.For
Documents you may be interested
Documents you may be interested