A Summary of Accounting Relations
The Balance Sheet
Assets
- Liabilities
=Shareholders' equity
The Income Statement
Net revenue
- Cost of goods sold
= Gross margin
- Operating expenses
= Operating income before interest and taxes (ebit)
- Interest expense
= Income before taxes
- Income taxes
= Income after tax and before ordinary items
+ Extraordinary items
= Net income
- Preferred dividends
= Net income available to common
Cash Flow Statement (and the Articulation of the Balance Sheet and Cash Flow Statement)
Cash flow from operations
+ Cash flow from investing
+ Cash flow from financing
= Change in cash
Statement of Shareholders' Equity (and the Articulation of the Balance Sheet and Income Statement)
Beginning equity
+ Comprehensive income
- Net payout
= Ending equity
Net Income
+ Other comprehensive income
= Comprehensive income
Dividend
+ Share repurchases
= Total payout
- Share issues
= Net payout
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
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