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Accounting: Using Financial Statements to Analyze A Company's Financial Health.
Transcript of Accounting: Using Financial Statements to Analyze A Company's Financial Health.
Assets - Liabilities = Owner's Equity
What is Accounting?
The language of business
What other groups would be interested
in accounting information?
Accounting: Who Needs It?
Debt vs. Equity Financing
1. Think about how often and how much money you spend each month.
2. List the instances money leaves your wallet or account.
3. Think about how much and how often money comes into your wallet or account.
4. How might you use this information to tell you about
the past and the help you predict the future?
Generally Accepted Accounting Principles
What Does the Sarbanes-Oxley Act Say?
1. Executives cannot borrow $ from their corporation.
2. CEOs and CFOs must sign statements attesting to accuracy.
3. At least one Board member must be a financial expert, not employed by the company.
4. Requiring corporate lawyers to report abuse.
Major Financial Statements
1.) The Balance Sheet
2.) The Income Statement
3.) The Statement of Cashflow
The Income Statement
Sales, Expenses, and Profit
Simple Income Statement
If you were asked to lend money to your cousin's clothing store to help her through a slow sales period, why would you want to look at assets and liabilities?
The Balance Sheet
what a company
what a company
Why would you also want to see your cousin's sales data? What would be the advantage of analyzing sales data for the last three years?
Statement of Cashflow
Tracks how much cash is coming
in and going out.