A- Annual report :- it’s a statement that gives an accounting picture of a firms operation and its financial position , there is two types of information are provided in annual report
First :- the verbal section witch often represents the firms operation result during the past two years or any period , and discuses new developments that will effect future operation . and explain why things turned out the way they did .
Second :- the presentation for four basic financial statements ( the balance sheet , the income statement , the statement of retained earnings and the statement of cash flows).
these four statements illustrate (what has actually happened to assets , earnings , and the dividends over the past few years .
These information is used by investors to help form an expectation about the future earnings of the firm and dividends
B- Balance sheet :- it’s a snapshot of firms financial position in the last day of given period . and a balance sheet changes daily because of
:- * Inventories are bought and sold .
* Fixed assets are added or retired .
* A bank loan balances are increased or paid down.
Its composite of a table of two sides :-
The Essay on Formats of Income Statement and Balance Sheet
Income statement: In the case of sole proprietary and partnership concerns there are no prescribed forms of the income statement and balance sheet. Their preparation is also desirable but not compulsory. However, they are generally prepared. In the case of trading concern, a trading account and in the case of a manufacturing concern, a manufacturing account and a trading account can also be ...
The left side of a balance sheet lists assets (which are the things that company owns) in order of liquidity or the length of time ,
The right side lists the claims that ( supplies , banks , bondholders , stockholders ) have against company and they must be paid in order ) .
C– the income statement :- reflects the financial performance over each of a given period of time ( monthly , quarterly and annually ) . witch contains net sales excluding (EBITDA) .which means earning before interest , taxes , depreciation and amortization .
D- depreciation :- its a policy applies by accountants , rather than treat the entire purchase of assets in a purchase year , they treat the expenses of assets by the assets useful life , in many years after , and it calculates in tangible assets in balance sheet .
E- Net worth or common equity :- it’s the asset net of liabilities and sum of common stocks and retained earnings , In case a company’s assets are sold and liabilities and preferred stocks were actually worth their book value , then the company in case of bankruptcy can sell its assets to pay liabilities and preferred stocks and remaining cash would belong to common stakeholders .
F- (EBITDA) :- its earning before interest , taxes , depreciation , and amortization .
G- STATEMENT OF cash flow :- represents a claim against assets , instead of distributing the money as dividends , they spend it on buying new assets .
H- The statement of cash flow :- it’s the amount of cash reported on its year-end balance sheet , it can be used in variety of ways , (pay dividends , increase inventories , keep it in bank , or to invest in fixed assets .
(3-2) what four statements are contained in annual report ?
Answer :-
1- the balance sheet ,
2- the income statement ,
3- the statement of retained earnings
4- the statement of cash flows
These information is used by investors to help form an expectation about the future earnings of the firm and dividends . (3-3)
If a “typical” firm reports $20 million of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without any qualms whatsoever?
The Business plan on Personal Budget Balance Sheet, Cash Flow
Memo To:Mr. Christopher De Maline From: Date:02/17/2014 Re:Personal Budget, Balance Sheet, and Cash Flow Statement Dear Mr. De Maline Saving money is extremely important however; some people do not have healthy savings thus leading them to financial instability. Therefore, being a good steward over your finances should be consistent and begin at an early age and progress as you age. This will ...
Answer :-
No , because the retained earning could be used in variety of ways , like pay dividends , increase inventories , keep it in bank , or to invest in fixed assets .
(3-4)
Explain the following statement: “While the balance sheet can be thought of as a snapshot of the firm’s financial position at a point in time, the income statement reports on operations over a period of time.”
Answer :-
Because the balance sheet changes daily as inventories are bought and sold , fixed assets are added or retired , or as a bank loan balances are increased or paid down . while the income statement is the financial performance of a firm during that period , and its more precise to analyze . (3-5)
What is operating capital, and why is it important?
