Under this form of comparative financial statements, both the comparative income statement and comparative Balance sheet are covered. Such comparative statements are prepared not only to the comparison of the various figures of two or more periods but also the relationship between various elements embodied in profit and loss account and balance sheet. It enables to measure operational efficiency and financial soundness of the concern for analysis and interpretations. Horizontal analysis refers to the comparison of financial data of a company for several years. The figures of this type analysis are presented horizontally over a number of columns.
Statement of financial position helps users of financial statements to assess the financial soundness of an entity in terms of liquidity risk, financial risk, credit risk and business risk. The amounts reported on the statement of financial position are the amounts as of the final moment of an accounting period. INCOME STATEMENT: which is also called a profit and loss account is a financial statement that measures a company’s financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenue and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically a year.
1) What is Dollarama’s largest current asset? Elaborate on what this has to do with their operations. Dollarama’s largest current asset is merchandise inventory. Current assets are items owned by an entity can be converted into cash within one year. Merchandise inventory is an extremely important part of this company as it is intended for sale to its customers.
The paper will calculate the financial ratios of company that will be interpreted with the implications of ratios. Moreover, the paper will describe the indicators of fraudulent reporting. Discussion Purpose of Income Statement It is also called profit and loss statement or income or expense statement. The main purpose of income statement is to indicate managers and investors whether the organisation was cost-effective
Efficiency Ratios The efficiency ratio is used to measure how the company uses its assets and liabilities internally, these ratios to measure the performance in short term. • Accounts Receivable Turnover This ratio used to measure the firm's effectiveness in extending credit and in collecting debts. The receivables turnover ratio is an activity ratio measuring how successfully a In collecting its AR during the year, if the company has AR turnover 2 that means the AR turned over two times during the year. Accounts Receivable Turnover= Credit sales AR average (assume that 75% sales are credit) AVON= 9.1 ULTA= 41.1 REVLON= 4.12 • Fixed Asset Turnover, Reflecting how efficiently a company has used its assets to generate revenue, a higher ratio indicate of greater efficiency in managing and investing fixed-asset. Fixed Asset Turnover= Net sales/ net assets EVON= 1.63 ULTA= 1.9 REVLON= .77 • Inventory turnover Inventory turnover is a ratio showing how many times a company's inventory is replaced over a specific period of time, the higher ratio the more success is the company in selling its inventory.
Week 8 June 1 – Accounting Statements and Cash Flow The topic that I have learnt today is on accounting statements and cash flow. The statement of cash flows contains the operating, investing and financing which are primary in business activity. Inflow is when the money are received and not necessarily earned. Whereas, outflow is when the cash is paid and not necessarily incurred. The information you get from the cash flow statement can help evaluate the company’s ability to meet its obligations.
Table of Contents Abstract: 3 Introduction: 3 Functions of an Accounting Information System: 4 Literature Review: 4 The Role of Financial Statement in Managerial Decision Making: 6 Accounting Information System related to Decision-making process: 7 Accounting Information on Decision-making Process: 7 Conclusion: 9 References: 10 Abstract: This paper discussed the extended normative model and supported through a longitudinal study. It is exploring the roles of Accounting Information Systems in an organization facing financial stages. Many teams suffer the various crises in different types. For example, Managerial, Marketing, and Production, financial. It follows systematic and traditional based decision-making concept such as game
Generally, cash flow statements are divided into three main parts for reviewing the cash flow from of this three types of activities: (1) operating activities (CFO); analyzes a company’s cash flow from net income or losses. (2) investing activities (CFI); shows the cash flow from all investing activities. (3) financing activities (CFF); shows the cash flow from all financing activities. Although I discuss each financial statement separately, they are all related because any changes in assets and liabilities that on the balance sheet are also reflected in the revenues and expenses that on the income statement, which result in the company’s profits or losses. Cash flows provide more information about cash assets listed on a balance sheet and are related to net income on the income statement but not exactly the same, And so on.
Financial management “is the operational and financing activity of a business that is responsible for obtaining and utilizing the funds necessary for effective operations. Thus, Financial Management is concerned with the effective funds management in the business process. Finance is interrelated functions which deals with marketing function, production function, Human Recourse function and Research & development activities of the business concern. Financial Management is concerned with the financing, acquisition and management of assets with some overall goal in minds. There are three major areas in Financial Management decision making.
The audit committee should collectively have sufficient financial knowledge of financial risks, financial sustainability reporting and internal controls. 3) The audit committee should oversee integrated reporting. The board of a company may delegate its responsibility for reporting and internal controls to the audit committee. Jackson and Stent (2010) noted that the audit committee will make recommendations to the board which will, after evaluating such recommendations, approve or reject them. One of the responsibilities of the audit committee is to monitor the integrity and completeness of the company’s financial reporting.