Lecture 1: FS Presentation

“How much is the current and non-current portion?”

Situtations:

1. Include and exclude

2. Unadjusted to adjusted
3. Working capital analysis
Current assets
(Current liabilities)
Working capital
4. Accounting equation analysis
A = L + E
5. Financial ratio analysis
 Accounts receivable turnover
 Asset turnover:
Sales___= Financial ratio
Ave. asset

CASH AND CASH EQUIVALENT

CASH: available for immediate use

1. Cash on hand
 Currencies and coins
 Checks: Kapag kasama sa C&CE,
o Personal current na agad ‘yon.
o Managers
o Customers
o Travellers
o Certified
o Except:
 Post dated
 NSF
 Stale
 Money order
“Basta kasama”
 Bank draft
o Bank overdraft is a liability
 2. Cash in bank
 Checking account:
o Demand deposit
Withdraw-able anytime
o Current account
 Savings deposit
 Time deposit: not cash but cash equivalent
 Deposit in closed bank
 Deposit in foreign bank – restricted
Other non-current asset
 Compensating balance asset
o Restricted
o Unrestricted (no adjustment)

3. Cash fund: cash assigned for a purpose

CURRENT OPERATION: paying for operating exp or current liab
C A  Petty cash fund
U S  Change fund
R S  Interest fund
R E  Tax fund
E T  Dividend fund
N S  Rent fund
T
 Payroll fund
N NOT FOR CURREnT OPERATION: paying for NC Asset or NC liab
O
O A
N  Sinking fund
T S
C  Pension fund Non-current liability
H S
U
E  Pref. share redemption fund
E R
T  Pre-acquisition fund
R R
S  Dep’n fund Non-current asset
E  Insurance fund
N  Contingency fund
T

CASH EQUIVALENT: short term investment; highly liquid

1. Treasury bills Highly liquid:

2. Money order 3 months from purchase
3. Time deposit date to maturity date
4. Pref. share with specific redemption date
More than 3 months:
Other CA
 TRADE AND OTHER RECEIVABLE

1. Trade receivable: basta “trade” current asset na

2. IOU
3. Supplier’s debit balance: basta “debit” receivable; “credit” liab
4. Accrued Income
5. N/R within 12 months: NCA if more than 12 months
6. Current portion of long term not
7. Subscription receivable within 12 months
8. Advances “to”: “from” payable
 Supplier
 Employee Current asset
 Personnel
 Subsidiary: if silent, NCA; if within 12mos, CA
 Officer
 Stockholder Non-current asset
 Associate/affiliate
9. Receivable financing
 Pledged: no journal entry; disclosure only
 Assigned
 Discounted
o With recourse: current asset
o Without recourse: excluded; di na makikita sa records
 Factored: excluded; di na rin makikita sa records

“Deferred” are always

non current