02 Jul RASMUSSEN Importance Of Cash Flow Statements And Balance Sheet
In your follow-up post, choose a student’s post with an opposing perspective and discuss your position.
There are three different posts choose one:
The statement of cash flows is the one that stands out to me with the case I picked. This financial statement covers what every company really needs to know to be able to stay in business. The statement of cash flow shows the company where they were sending their money and how they earned the money in the first place. This will help company’s understand why they were either short in making profit or why they were over profit. Company’s needed to have breakdowns and monitor their spending and cash flow because it can get lost and you could end up in the gutter really quick. This goes hand in hand with my case because Centegra needed help from Warbird to get their profit back on track so they could merge with Northwestern. They did not know where their profit was going and how they ended up in such debt. I think this financial statement has it covered. The other financial statements are just as important because they give other perspectives on the company’s well being not just over where the money came from and where it goes.
I have chosen the Statement of Cash Flow; this depicts how a company has spent its cash. It is important because it informs of a business’ cash position. For a business to be successful, it must have sufficient cash at all times. Cash is needed to pay expenses, pay bank loans, taxes, and/or to purchase new resources. A cash flow report determines whether or not a business has enough cash to do exactly that. Having cash is a key requirement for a business to stay solvent. When a business does not have enough cash to pay its dues, it is often declared bankrupt.
The Statement of Cash Flow is often used in combination with other reports, although a business’ cash flow is important; other financial statements (Statement of operations, Statement of Change in Net Assets etc.) are also important because they provide information about the performance and changes in financial standings of a business. The information provided is beneficial to a wide range of users in making financial decision. All together these statements and reports will determine if a business will or will not be successful.
In any business organization, financial management is a fundamental function that determines the organization performance. It helps the management track its performance records evaluating its current financial position and prepare for future financial management. There are several finance management tools used and this include; balance sheet, the statement of operation and the statement of cash flow. For Healthcare organization, financial management techniques provide a substantive framework for development and performance measurement. They enable the healthcare management establishes measures for the provision of quality healthcare services and formulates strategies healthcare improvement due to balance in financial position.
The balance sheet is a financial statement that provides the organization’s liabilities, assets and shareholders’ equity basing on specific financial periods. A balance sheet is a significant finance management statement essential in healthcare organization since it provides dynamic financial information about financial spending. Due to the availability of technological systems, computing systems have provided financial assessment measures for the organization’s capital structure. The aspects that define a company’s balance sheet include liabilities, assets and shareholder equity. The three aspects are essential for the development of an organization since they define the essential capital structure of an organization showing the financial utility and functions.
The three principles of balance sheet consist of various accounts that breakdown the financial specifics of the organization. The balance sheet is like a snapshot that represents the financial state of the company at a particular moment. The different ratios obtained from the balance sheets help investors get information on the financial health of an organization. Some of the essential ratios include acid-test ratio and debt-to-equity ratio. The current assets include cash and equivalents, inventory and accounts receivable. Another aspect of assets includes non-current assets include intangible assets, plant, equipment, and property. In a health organization, there are current liabilities and as well as non-current liabilities that define the financial operating structure.
Other financial statements include statements of operation and the cash flow statement. Information from the two statements is of vital importance in the financial management of the organization. The statement of cash flow, for instance, shows the flow of the organization’s cash: inflow or outflow providing accountability for the organization’s finances within a specific time. The statement of operation, on the other hand, provides information on the performance of the organization about profit or loss-making dynamics within a given period of time.
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