% of Product sales method
+/- Changes in seed money since previous
balance sheet time =
A histogram is better because
Revenue/Cost marriage remains frequent
Leads to incorrect forecasts, specifically
when product sales increasing or decreasing
+ Decreases in current possessions
+ Increases in current liabilities
- Increases in current possessions
- Diminishes in current liabilities
enables you to see the real age of the
Record and collect transactions employing GAAP " rules. "
records real transactions based upon previous decisions
Accounts often kept on accrual basis, but cash flow is necessary for economical management Tips for measuring functionality accrual versus cash flow
Accounting organizes details and presents reports
Economic managers foundation decisions about this information
liabilities registered to match expense with
earnings (in a similar period)
will be the costs to shareholders of keeping
managers' desired goals and their goals aligned
Company Costs- Motivation plans
associated with share selling price increase
What are the risks?
Firm Costs- Performance plans
tied to certain aims
What are the hazards?
Managers are agents to get the owners and must act inside the owners' needs. Internal controls and incentives can help guarantee managers behave as agents. Market forces, for example a takeover hazards or security analysts' reviews, also willpower managers.
Studies require considerate consideration
Results aren't always the actual appear to
Must consider the root " drivers"
Cash Flow Statement
The Health of the Organization
Annual Report to Shareholders
Assets sama dengan
Equally-spaced cash flows of equal size.
Can be both cash inflows or funds outflows.
A typical (deferred) pension has funds flows that occur at the end of each period. An pension due features cash goes that occur at the beginning of each period. An annuity credited will always be higher than an otherwise comparative ordinary annuity because interest will substance for yet another period.
Property = Liabilities + Owners' Equity
Average Age of Inventory
Can be misleading
work with histogram mainly because
you see the actual age of the inventory вЂ‹- some items might be turning 12 times per year; other folks 0 instances!
Average Collection Period
Day time Sales Outstanding (DSO)
Accounts Receivable/(net sales/365)
Average Repayment Period
Accounts Payable/(Annual purchases/365)
Estimated depending on cost of products sold
Normal tax rate =
Balance Sheet -- again to clarify-Accruals
debts recorded to suit expense with
revenue (in the same period)
Balance Sheet - again to clarify-Defferrals
-- balance sheet accounts that monitor timing differences
between funds payments and the recognition of
revenue or perhaps expense (also the coordinating principle)
"balance sheet" - Intangible Assets
Whats shown and whats not really
Shown for the Balance Sheet:
Goodwill ($ paid above book benefit for acquisition)
Not proven on the "balance sheet":
Employee & Customer commitment
Superior Business Processes
balance sheet Current Resources
expected to be converted to cash within just
long-term debt investments used by businesses and government authorities to raise large sums of money.
Fixed interest rates and maturity date
Focused by institutional investors
Solid primary mkt; weak second mkt
Senior to fairness claims in liquidation
Spending budget is a two Direction Procedure
Strategy -- top down
Details - bottom up
But the organizing / cash strategy process must allow for the opportunity that an alternative strategy might emerge from the process of creating the budget!
Costs often focus on the prior year's actual operating...
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