Management and Organizational Studies 2310A/B Lecture Notes - Lecture 2: Reserve Requirement, Promissory Note, Asset Management

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Nicholas Kahnert

Document Summary

Cash in ow: occurs when we sell" something. Increase in liability or equity account (borrowing money) Cash out ow: occurs when we buy" something. Summarizes the sources and uses of cash. Operating activity: includes net income and changes in most current accounts. Investment activity: includes changes in xed assets. Financing activity: includes changes in notes payable, long-term debt and equity accounts as well as dividends. Compute all accounts as a percent of total assets. Compute all line items as a percent of sales. Express each line item as a multiple of the base year item. Easier to compare nancial information, particularly as the company grows. Useful for comparing companies of di erent sizes, particularly within the same industry. Ratios express data in relative terms, rather than absolute terms. Allows for better comparison through time or between companies. As we look at each ratio, ask yourself what the ratio is trying to measure and why that information is important.