 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Financial Statements, Taxes, and Cash Flow
Learning ObjectivesAfter studying this chapter in the textbook, you should be able to:
| Be familiar with the composition of the balance sheet as well as the importance of assets, liabilities and owners' equity as components of the well-known accounting identity. |
| | | | Define and be able to compute net working capital. |
| | | | Define liquidity and understand why it is important. |
| | | | Distinguish between accounting (or book) value and market value and explain why market value is more relevant from the perspective of financial managers. |
| | | | Be familiar with and understand the importance of the income statement. |
| | | | Outline and be able to compute the three components of the cash flow from assets. |
| | | | Outline and be able to compute the components of both the cash flow to creditors and the cash flow to shareholders. |
| | | | Calculate the average tax rate and contrast this rate with that of the marginal tax rate. |
| | | | Compute the effective tax rate on dividends. |
| | | | Define and compute the capital gain available from the sale of an asset. |
| | | | Explain the basic idea behind the Canadian capital cost allowance (CCA) system. |
| | | | Define a terminal loss and a CCA recapture and compute their respective tax effects when an asset pool is closed. |
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2002 McGraw-Hill Higher Education