FINANCIAL MANAGEMENT

Revenues are recorded at the point of sale and costs when they are incurred, not necessarily when a firm receives or pays out cash

• Accrual-based Approach

• FINANCIAL STATEMENT

• Cash flow approach

• Income Statement

Used by financial professionals to focus attention on current and prospective inflows and outflows of cash

• Cash flow approach

• Accrual-based Approach

• Income Statement

• Statement of Retained Earnings

“snapshot”. View of the company’s financial position at a specific point in time

• Balance

• Notes to Financial Statements

• Statement of Cash Flows

• Balance Sheet

also called “profit”. Earnings or margin

• Income

• Gross Profit

• Pretax Income

• Other Income

reconciles the net income earned during a given year and any cash dividends paid

• Statement of Retained Earnings

• Statement of Cash Flows –

• Notes to Financial Statements

• Cash Flow Analysis

reconciles the firm’s operating, investment, and financing cash flows

• Statement of Cash Flows

• Notes to Financial Statements

• Cash Flow Analysis

• Statement of Retained Earnings

explanatory notes that provide detailed information on the accounting policies, calculations and transactions

• Notes to Financial Statements

• Cash Flow Analysis

• Statement of Cash Flows

• Statement of Retained Earnings

financial managers are interested in the information contained in the firm’s accrual-based financial statements their primary focus is on cash flows/without adequate cash to pay obligations on time, to fund operations and growth

• Cash Flow Analysis

• Statement of Retained Earnings

• Statement of Cash Flows

• Notes to Financial Statements

a firm’s to satisfy its short-term obligations as they come due

• Liquidity Ratios

• Activity Ratios

• Debt Ratios

• Profitability Ratios

speed at which a firm converts various accounts into sales or cash

• Activity Ratios

• Debt Ratios

• Profitability Ratios

• Market Ratios