Professional Documents
Culture Documents
Depreciation
effect
Investment
base
Operations
Price
Volume
Costs (fixed
&variable)
Financing
Dividends
Operating profit
after taxes
Interest
(tax-adjusted)
Retained
earnings
Shareholders
equity
Long-term
debt
Funding
potential
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-3-
To provide an example of the balance sheet of a major corporation, Table 2.1 shows the
consolidated balance sheets for December 31, 2007, and December 31, 2006, of TRW Inc., as
published in its 2007 annual report, but presented here without accompanying notes. TRW Inc. is a
global manufacturing and service company headquartered in Cleveland, Ohio. Its strategically
focused on providing products and services with a high technology or engineering content to the
automotive, space and defense, and information systems markets. TRW holds leading positions in
most of its market segments. Founded in 1901, the company employs about 72,500 people in 24
countries, and was ranked 146th in sales in the Fortune 500 listing for 1997.
-5-
2007
2006
$ 70
1,617
573
79
96
2,435
6,074
3,453
2,621
$ 386
1,378
524
69
424
2,781
5,880
3,400
2,480
673
232
905
94
811
139
404
$ 6,410
258
31
289
78
211
51
376
$ 5,899
$ 411
338
859
846
38
99
128
2,719
788
1,117
57
105
$ 52
386
781
775
39
52
72
2,157
767
458
272
56
1
78
462
1,776
(130)
(563)
1,624
$ 6,410
1
80
437
1,978
47
(354)
2,189
$ 5,899
Again, we are providing an actual example of an income statement in Table 2.2, the
consolidated statement of earnings for TRW Inc. for the years ending December 31, 2007, and
December 31, 2006.
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Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrative and selling expenses . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . .
Purchased in-process research and development . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses (income) net . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) from continuing operations before taxes
Excluding purchased R&D; special charges (06) . . . . . .
Reported earnings (loss) before income taxes . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) from continuing operations
Excluding purchased R&D; special charges (06) . . . . . .
Reported earnings (loss) after income taxes . . . . . . . . . .
Discontinued operations, gain on disposition, after taxes .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preference dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) applicable to common stock . . . . . . . . . . .
Per share of common stock:
Average number of shares outstanding (millions)
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net earnings (loss) per share
From continuing operations
Excluding purchased R&D; special charges . . . . . . . . .
Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
From discontinued operations . . . . . . . . . . . . . . . . . . . . .
Diluted net earnings (loss) per share . . . . . . . . . . . . . . . . .
Basic net earnings (loss) per share
From continuing operations
Excluding purchased R&D; special charges . . . . . . . . .
Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
From discontinued operations . . . . . . . . . . . . . . . . . . . . .
Basic net earnings (loss) per share . . . . . . . . . . . . . . . . . .
Book value per share (year-end) . . . . . . . . . . . . . . . . . . . .
Tangible book value per share (year-end) . . . . . . . . . . . . .
Other data ($ millions):
Depreciation of property, plant, and equipment . . . . . . . . .
Amortization of intangibles, other assets . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-8-
2007
$10,831
8,826
2,005
461
684
548
75
(3)
1,765
2006
$ 9,857
8,376
1,481
412
613
84
70
1,179
788
240
289
687
302
120
499
(49)
$ (49)
$ (49)
434
182
298
$ 480
1
$ 479
123.7
123.7
132.8
128.7
$ 4.03
(0.40)
$ (0.40)
$ 3.27
1.37
2.25
$ 3.62
$ 4.03
(0.40)
$ (0.40)
13.19
6.58
$ 3.29
1.41
2.31
$ 3.72
17.29
15.62
$ 480
10
549
154
$ 442
10
500
148