Forming a Strategic Partnership With Finance

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Forming a Strategic Partnership With Finance
The Pastella / Novak Group at Smith
Barney Maureen Novak, CFA Certified Financial
Planner OnSite Coordinator
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Financial Statements

• Balance Sheet
• Income Statement
• Cash Flow Statement

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Balance Sheet

• Assets
• Liabilities
• Shareholders Equity

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Balance Sheet
Assets Liabilities Shareholders
Equity
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Balance Sheet
Left Hand Side (Assets) Current Assets cash,
accounts receivable, assets that can be converted
into cash quickly Property Equipment long
term operating assets Other Assets anything
else Goodwill excess of purchase price over FMV
Right Hand Side (Liabilities Shareholders
Equity) Current Liabilities liabilities that
come due within 12 months Long Term Liabilities
debt not maturing in 12 months i.e.
bonds Stockholders Equity whats leftover
after all debt has been paid
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Abercrombie FitchConsolidated Balance Sheets
(000s)   February 2, 2002 February 3,
2001 Current Assets Cash and Equivalents 167,66
4 137,581 Marketable Securities 71,220 - Rec
eivables 20,456 15,829 Inventories 108,876
120,997 Store Supplies 21,524 17,817 Other
15,455 11,338 Total Current Assets 405,195 3
03,562
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Abercrombie FitchConsolidated Balance Sheets
(000s)   February 2, 2002 February 3,
2001 Current Liabilities   Accounts
Payable 31,897 33,942 Accrued
Expenses 109,586 101,302 Income Taxes
Payable 22,096 21,379 Total Current
Liabilities 163,579 156,623
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Balance Sheet
Cash Working Capital Working Capital Current
Assets Current Liabilities 405,195
163,579 241,616
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Income Statement

• Revenue
• Cost of Goods Sold (COGS)
• Gross Profit
• Gross Profit Margin

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Income Statement

• Ice Cream Store
• Bought 100 gallons of ice cream for 2/gallon
• Sold each gallon for 5

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Income Statement
Total Revenue 500 (100 gallons x
5/gallon) Cost of Revenue 200 (100 gallons
x 2/gallon) Gross Profit 300 Gross Profit
Margin .6 (60) Gross Profit / Total
Revenue 300 / 500 .6 (60)
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Income Statement

• Operating Expenses
• Research Development
• Selling, General Administrative (SGA)
• Operating Income
• Net Income

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Income Statement

• Ice Cream Store
• 100 gallons of chocolate ice cream for
  2/gallon
• Sold each gallon for 5
• Signs and Advertising 12
• Employee Salary 13
• Survey of favorite flavors 10

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Income Statement
Ice Cream Store Example
Revenue 500 500 COGS 200 200 Gross
Profit 300 300 Operating Expenses SGA
25 12 RD 10 10 Operating
Income 265 278 Interest Income and Taxes
(80) (80) Net Income 185 198

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Income Statement
Ice Cream Store Example
Revenue 500 500 Operating Expenses SGA
25 12 RD/Marketing 10 10 Operating
Income 265 278 Operating Profit Margin .53
.56 Operating Profit / Revenue 265 /
500 .53 (53)

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Income Statement
Ice Cream Store Example
Revenue 500 500 Operating Income 265 278
Interest Income and Taxes (80) (80) Net
Income 185 198 Net Profit Margin .37
.40 Net Profit / Revenue 185 / 500 .37
(37)

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Abercrombie FitchConsolidated Statements of
Income (000s) Fiscal year ended 2001 2000 199
9 Net Sales 1,364,853 1,237,604 1,030,858 Cos
t of Goods Sold, Occu- pancy Buying
Costs 806,816 728,229 580,475 Gross
Income 558,034 509,375 450,383 General,
Administrative and Store Operating
Expense 286,576 255,723 209,319 Operating
Income 271,458 253,652 242,064 Interest
Income, Net (5,064) (7,801) (7,270) Income
Pre-Income Txs 276,522 261,453 249,334 Provision
for Income Txs 107,850 103,320 99,730 Net
Income 168,672 158,133 149,604  
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In Review
Working Capital Current Assets Current
Liabilities Gross Profit Revenue COGS
(Cost of Goods Sold) Gross Profit Margin
Gross Profit / Revenue Operating Profit
Gross Profit Operating Expenses Operating
Margin Operating Income / Revenue Net
Income Revenue Everything Net Profit
Margin Net Income / Revenue
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Resources
www.SEC.gov www.freeedgar.com Barrons
Dictionary of Finance and Investing Terms How
to Detect Accounting Gimmicks and Fraud in
Financial Reports by Howard Schilit The Wall
Street Journal Guide to Understanding Money
Investing The Wall Street Journal Guide to
Understanding Personal Finance

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Smith Barney OnSite Services Financial planning
and educational seminars for employees.