A Roadmap to the Preparation of the Statement of Cash Flows
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Modeling Dividends, Earnings, and Book Value Equity: an Empirical Investigation of the Ohlson Valuation Dynamics
Review of Accounting Studies, 1,207-224 (1996) @ 1996 Kluwer Academic Publishers, Boston. Manufactured in The Netherlands. Modeling Dividends, Earnings, and Book Value Equity: An Empirical Investigation of the Ohlson Valuation Dynamics SASSON BAR-YOSEF The Hebrew University of Jerusalem JEFFREY L.CALLEN Department of Accounting, Stem School of Business, New York University, New York, NY 10012 JOSHUA LIVNAT Department of Accounting, Stern School of Business, New York University, New York, NY 10012 Abstract. This study empirically investigates the information dynamics of the Ohlson valuation framework. Single-period lagged linear autoregressive relationships among dividends, earnings, and book values of equity are estimated for a sample of stochastically stationary firms and are found not to support the valuation framework. This study further extends the empirical analysis to a multilagged vector autoregressive linear information system. Consistent with the Ohlson valuation framework, the past time series of all three variables are generally found to be relevant for firm valuation. This study brings into question empirical research utilizing the Ohlson framework that presupposes a single-period lagged information dynamic. The valuation models of Ohlson (1989, 1990, 1995) and Feltham and Ohlson (1994a, 1994b, 1995) representfirm value by reference to (discounted) accounting variables rather than cash flows. This is important for accounting researcherswho have a comparative advantage in understanding accounting variables but who are often forced by the extant cash-flow valuation models to unbundle the accounting numbersin order to obtain cash- flow figures. It is ironic. On the one hand, accounting practice and researchmaintain that accounting earningsand the accrual processgenerate numbers that are more relevant for firm valuation than cashflows, and yet, on the other hand, when studying the valuation process, accounting researchersoften find themselvesunbundling those same earnings numbers to apply valuation models representedby (discounted) cash-flow variables. -
The Top 87 of 2019!
THE TOP 87 OF 2019! Rank Artist Title Label 1 CAMEL PHAT/CRISTOPH BREATHE (ft. Jem Cooke) Arista 2 MAHALO & DL/LILY DENNING SO COLD Perfect Havoc 3 GRYFFIN REMEMBER (f. ZOHARA) Geffen 4 CHAINSMOKERS/ILLENIUM TAKEAWAY (f. Lennon Stella) Disruptor/Columbia 5 NOTD/FELIX JAEHN SO CLOSE (f. Georgia Ku & Capt. Cuts) Island/Republic 6 JAX JONES/MARTIN SOLVEIG ALL DAY AND NIGHT (f. Madison Beer) Interscope 7 ARMIN VAN B/ABOVE & BEYOND SHOW ME LOVE Armind 8 ARIANA GRANDE THANK U, NEXT Republic 9 LODATO HOME Overdrive 10 HALSEY WITHOUT ME Capitol 11 CHEAT CODES/DANIEL BLUME WHO'S GOT YOUR LOVE 300 Ent. 12 PHANTOMS DESIGNS FOR YOU Casablanca/Republic 13 SILK CITY/DIPLO/ MARK RONSON ELECTRICITY (f. Dua Lipa) Columbia 14 KYGO/WHITNEY HOUSTON HIGHER LOVE RCA 15 KHALID TALK RCA 16 D-SOL/KATT ROCKELL FEEL ALIVE Pay Back/Big Beat 17 MADEON ALL MY FRIENDS Columbia 18 KYGO/VALERIE BROUSSARD THINK ABOUT YOU RCA 19 MARTIN GARR/MATISSE & SADKO MISTAKEN (f. Alex Aris) RCA 20 GRYFFIN/SLANDER ALL YOU NEED TO KNOW Darkroom/Geffen 21 KHALID BETTER RCA 22 STEVE AOKI/BTS WASTE IT ON ME Ultra 23 AVICII HEAVEN Avicii Music/AB/Geffen 24 LIL NAS X OLD TOWN ROAD Columbia 25 DAVID GUETT/MARTIN SOLVEIG THING FOR YOU Warner/FFRR 26 FLORA CASH YOU'RE SOMEBODY ELSE Bee & E/RCA 27 AVICII/ALOE BLACC S.O.S. Geffen/Interscope 28 DOM DOLLA TAKE IT Sweat It Out 29 ARTY SAVE ME TONIGHT Armada 30 BENNY BLANC/CALVIN HARRIS I FOUND YOU Interscope 31 DALLASK/NICKY ROMERO SOMETIMES (f. -
3.5 FINANCIAL ASSETS and LIABILITIES Definitions 1. Financial Assets Include Cash, Equity Instruments of Other Entities
128 SU 3: Financial Accounting I 3.5 FINANCIAL ASSETS AND LIABILITIES Definitions 1. Financial assets include cash, equity instruments of other entities (e.g., preference shares), contract rights to receive cash or other financial assets from other entities (e.g., accounts receivable), etc. 2. Financial liabilities include obligations to deliver cash or another financial asset (e.g., bonds or accounts payable), obligations to exchange financial instruments under potentially unfavorable conditions (e.g., written options), etc. Initial Recognition 3. A financial asset or liability is initially recognized only when the entity is a party to the contract. Thus, contract rights and obligations under derivatives are recognized as assets and liabilities, respectively. a. A firm commitment to buy or sell goods or services ordinarily does not result in recognition until at least one party has performed. 1) However, certain contracts to buy or sell a nonfinancial item may result in recognition of an asset or liability. a) For example, a firm commitment to buy a commodity in the future that (1) can be settled in cash and (2) is not held for the purpose of receiving the commodity is treated as a financial instrument. Accordingly, its net fair value is recognized at the commitment date. b) If an unrecognized firm commitment is hedged in a fair value hedge,a change in its net fair value related to the hedged risk is recognized as an asset or liability. 4. An issuer of a financial guarantee initially recognizes a liability and measures it at fair value. Subsequent measurement is at the greater of (a) the amount based on accounting for provisions or (b) the amortized amount. -
Hedge Accounting FBS 2013 USER CONFERENCE
9/12/2013 Hedge Accounting FBS 2013 USER CONFERENCE Purpose of a Hedge • Provide a change in value of the hedging instrument in the opposite direction of the hedged item. • For tax purposes, the gains or losses on from hedging activities are recognized when hedges are lifted • For accounting purposes, hedging gains/losses are recognized in the period the gains or losses occur – Hedging is consider normal business operation so should be matched to gross revenue and expense 1 9/12/2013 What is Hedging? • Hedging is a risk management strategy that attempts to offset price movements of owned assets, planned production of a commodity or good, or planned purchases of commodity or good against a derivative instrument (which generally derives its value from an underlying physical commodity). • It is not an attempt to make money in the futures and options markets, but rather an attempt to offset price changes in the cash market, thereby protecting the producers net income. What is Not Hedging? • Speculation – Taking a futures or options position in a commodity not owned or produced. – Taking the same position in the futures or options market as exists (or will exist) on the farm. • Forward contracts – Fixed price, delayed or deferred price contracts, basis contracts, installment sale contracts, etc. 2 9/12/2013 Tax Purposes • May be different from GAAP • An agricultural producer normally reports hedging gains or losses when the hedge is closed (similar to GAAP). • However, if the producer meets certain requirements, they can elect to report all hedging gains and losses on a mark- to-market basis (i.e. -
Fixed Asset Inventory System
PROCEDURES MANUAL FIXED ASSET INVENTORY SYSTEM FOR COUNTY BOARDS OF EDUCATION IN THE STATE OF WEST VIRGINIA Office of School Finance West Virginia Department of Education PROCEDURES MANUAL FIXED ASSET INVENTORY SYSTEM FOR COUNTY BOARDS OF EDUCATION IN THE STATE OF WEST VIRGINIA Revised July 16, 2001 Copies may be obtained from: West Virginia Department of Education Office of School Finance Building 6, Room 215 1900 Kanawha Boulevard E. Charleston, West Virginia 25305 FIXED ASSET INVENTORY SYSTEM PROCEDURES MANUAL FOREWORD Allocating, operating, and accounting for the physical assets of a school system are among the most important responsibilities of school administrators. Expenditures for fixed assets are generally the most visible costs a school district incurs. Yet, the accounting for such assets, once acquired, has generally received little attention. Implementation of a fixed asset inventory accounting system will enable local education agencies to maintain an inventory of all assets, including those purchased with federal funds. In addition, the system will assist all agencies in obtaining an unqualified opinion on their audited financial statements, and will assign responsibility and accountability for the security of fixed assets. The system can also be used for purposes of insurance and proof of loss. This manual has been developed by the West Virginia Department of Education in order to provide uniform standards throughout the State for all county boards of education, regional education service agencies, and multi-county vocational centers to use in developing a fixed asset inventory accounting system. The manual prescribes the minimum requirements that are to be encompassed in establishing such a system, and provides a list of the codes that are to be used in classifying fixed assets. -
90 Significant Accounting Policies Cash and Cash Equivalents Cash
Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents includes cash and due from banks, federal funds sold and resale agreements and interest-bearing deposits at other banks. Cash paid for interest for the years ended December 31, 2008, 2007 and 2006 was $4.0 billion, $4.5 billion and $2.9 billion, respectively. Cash paid for income taxes for the years ended December 31, 2008, 2007 and 2006 was $1.2 billion, $1.5 billion and $1.5 billion, respectively. Securities Available for Sale The Company considers the nature of investments in securities in order to determine the appropriate classification and currently treat investments in debt securities as securities available for sale. These securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of cumulative other comprehensive income. The fair value of securities is based on quoted market prices, or if quoted market prices are not available, then the fair value is estimated using the quoted market prices for similar securities, pricing models or discounted cash flow analyses, using observable market data where available. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization or accretion is included in interest income. Realized gains and losses on sales of securities are determined using the specific identification method. The Company evaluates its unrealized loss positions for impairment in accordance with SFAS 115, as amended by FSP No. 115-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments and EITF 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets and FSP EITF 99-20. -
Primer on Accrual Accounting
GOVERNMENT ACCOUNTING STANDARDS ADVISORY BOARD PRIMER ON ACCRUAL ACCOUNTING Compiled by GASAB Secretariat O/o the Comptroller and Auditor general of India 10, Bahadur Shah Zafar Marg, New Delhi-110002 Accrual Accounting It is a system of accounting in which transaction are entered in the books of accounts, when they become due. The transactions are recognised as soon as a right to receive revenue and/or an obligation to pay a liability is created. The expenses are recognised when the resources are consumed and incomes are booked when they are earned. Therefore, the focus is on the recording of flow of resources i.e. labour, goods, services and capital., the related cash flow may take place after some time (of event) or it may or may not take place in the same accounting period. Cash Accounting In this system of accounting transactions are recorded when there is actual flow of cash. Revenue is recognised only when it is actually received. Expenditure is recognised only on the outflow of cash. No consideration is given to the “due” fact of the transaction. This system of accounting is simple to understand and as such needs less skill on the part of the accountant. Its whole focus is on cash management. The recognition trigger is simply the flow of cash. Budgetary and legislative compliance is easier under this system. Limitations of cash system of accounting The limitations of cash based accounting are: - It does not provide the complete picture of the financial position i.e. information on assets and liabilities are not available for fixed assets (land, building, machineries, defence, heritage assets etc.) - No information about capital work-in-progress like dams, power plants, roads and bridges etc. -
Webinar Small Business Playbook for Effective Cash Flow Forecasting Pretty Books Learning Lab 2 03/2020
Webinar Small Business Playbook for Effective Cash Flow Forecasting Pretty Books Learning Lab 2 03/2020 Learning Lab Playbook // Cash flow management is vital to all companies, big or small. Establishing good Small Business cash flow forecasting practices provides you with clarity into your money and lets Playbook for Effective you stay ahead of the game. In this learning lab, you will learn the playbook for Cash Flow Forecasting managing cash flow forecasting. Pretty Books Before we begin. 3 03/2020 • Presentation is about 10 minutes. • Email questions after the webinar to: [email protected] • Free 30-Min Office Hour available . • Presentation will be emailed to you. • Cash Flow tool kit is available for download on the resources page of our website. Pretty Books Agenda 4 03/2020 Introduction The Financial ‘Fog‘? The Playbook Summary Questions & Answers Pretty Books Cash flow amidst uncertainty. 5 03/2020 01 How much money do I have? You are required to look Where did my money go? ahead to make decisions 02 now, however, looking out is not so easy. There are 03 How much money do I need? always more questions. Nothing is definite. 04 How long will my money last? Pretty Books Clear the fog! Know your numbers. 6 03/2020 Clear the fog! Know your numbers, get clear with your financials. // Clear the fog! Clearing the ‘fog‘ is something every business does, big or small, crisis or not. This is because the interplay of profit, cash in bank and investment is dynamic. Your goal is to clear out as much of this ‘fog‘ as possible, letting you plan better and make more informed decisions. -
Accrual Vs. Cash Accounting
Accrual vs Cash One of the first steps in setting up an accurate accounting system is selecting a method of recording transactions. The two most common methods are the cash basis of accounting and the accrual basis of accounting. This article highlights the differences between these methods, and presents considerations when choosing which method is right for your organization. Cash Method Accrual Method The cash method is the simplest option, and replicates The more complex accrual method is what is required by checkbook accounting used in personal finances. Income Generally Accepted Accounting Principles (GAAP). If your and expenses are recognized when the cash is transferred. organization plans to go through a financial statement au- Revenue is recorded when funds are received and expens- dit or review, it is highly recommended that the organiza- es are recorded when bills are paid, regardless of when tion adopt the accrual method so that it is in conformance the transaction was entered into between the organiza- with GAAP. Lending and funding sources also often re- tion and the donor/customer or vendor. As a result, the quire financial information be submitted using the accrual balance sheet of a cash basis organization only contains method. This method records income when it is earned cash and net assets. Receivables, prepaid expenses, paya- and expenses when they are incurred. As a result, income bles and deferred revenue are all accrual concepts ignored and all of the costs incurred in the process of earning the when using the cash method. The benefits of this method revenue are matched and recorded in the same fiscal peri- are the simplicity and a clear sense of cash flow. -
When an Asset Has Been Sold, Demolished, Is No Longer in Service
Policy Title: Facilities and HARVARD UNIVERSITY FINANCIAL POLICY Equipment Responsible Office: University Accounting Services Effective Date: February 15, 2007 FACILITIES AND EQUIPMENT – Revision Date: DISPOSALS AND IMPAIRMENTS PROCEDURES Policy Number: FA4 PROCEDURES • Basic rules: When an asset has been sold, demolished, is no longer in service or its value has been permanently impaired, any remaining value of the asset, net of accumulated depreciation, less any salvage value, must be written off or written down to its net realizable value. This involves removing both the asset and the accumulated depreciation from the general ledger, and recognizing a gain or loss for the difference. Additionally, any remaining plant equity is transferred to operating net assets. Any outstanding loans on debt-financed assets that are being written off must be settled. • Types of disposals: Sales of assets External – Sales of assets to third parties will result in either a gain or loss on sale. Where proceeds are greater than the net book value of the asset (historical cost less accumulated depreciation), a gain is credited to object code 5772, “Gain on sale, capital asset^miscellaneous income, External.” Conversely, where proceeds are less than the net book value of the asset, a loss is debited to object code 8722, “Loss on sale of capital asset.” In either case, the asset is written off by debiting accumulated depreciation and crediting the asset, and recognizing a gain or loss for the difference. If the asset is not yet fully depreciated, any remaining plant equity is transferred to operating net assets. This transfer would be recorded using the 9300 range of object codes, as a below-the-line internal transfer (non- operating activity). -
14. Calculating Total Cash Flows
Chapter 2 Lecture Problems 14. Calculating Total Cash Flows. Greene Co. shows the following information on its 2008 income statement: Sales = $138,000 Costs = $71,500 Other expenses = $4,100 Depreciation expense = $10,100 Interest expense = $7,900 Taxes = $17,760 Dividends = $5,400. In addition, you're told that the firm issued $2,500 in new equity during 2008, and redeemed $3,800 in outstanding long-term debt. a. What is the 2008 operating cash flow? b. What is the 2008 cash flow to creditors? c. What is the 2008 cash flow to stockholders? d. If net fixed assets increased by $17,400 during the year, what was the addition to NWC? a. To calculate the OCF, we first need to construct an income statement. The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get: Income Statement Sales $138,000 Costs 71,500 Other Expenses 4,100 Depreciation 10,100 EBIT $52,300 Interest 7,900 Taxable income $44,400 Taxes 17,760 Net income $26,640 Dividends $5,400 Addition to retained earnings 21,240 Page 1 Chapter 2 Lecture Problems Dividends paid plus addition to retained earnings must equal net income, so: Net income = Dividends + Addition to retained earnings Addition to retained earnings = $26,640 – 5,400 Addition to retained earnings = $21,240 So, the operating cash flow is: OCF = EBIT + Depreciation – Taxes OCF = $52,300 + 10,100 – 17,760 OCF = $44,640 b. -
American Music Awards 2016 Marketing Campaign
Contact: Diane Morgan Eileen Wunderlich Fiat Chrysler Automobiles Celebrates 7.8 Billion YouTube Music Video Views With Two- minute Commercial During 2016 American Music Awards Tonight (Sunday, November 20) Company amasses 7.8 billion views on YouTube thanks to music videos featuring custom vehicle integrations through collaborations with major record labels FCA is the official Automotive sponsor of the American Music Awards telecast Two-minute television spot during American Music Awards (on ABC from 8 PM - 11 PM EST) this Sunday night celebrates the music industry with “ Music Brings Us Together” message One-minute Ram Truck brand spot “ Work” to also debut during broadcast FCA US has collaborated with the music world’s biggest record labels across genres to organically feature vehicles in music videos Videos will be available on Company’s social channels after show November 20, 2016, Auburn Hills, Mich. - The ongoing collaboration between FCA US and the music industry’s top music labels has pushed the automaker’s presence in official YouTube music videos to a record of nearly 8 billion views and climbing. The Company will debut a two-minute spot ("Music Brings Us Together") and a one-minute spot ("Work") celebrating its ties to the music industry during this Sunday night’s American Music Awards broadcast November 20 on ABC from 8 p.m. to 11 p.m. EST. “This music program embodies the best of FCA’s culture of leadership – mind blowing engagement numbers, an exclusive connection with the Millennials, authentic relevance for our brands and a targeted audience that aligns organically with each brand’s set of values and ethos,” said Olivier Francois, Chief Marketing Officer, FCA – Global.