Management and Organizational Studies 3360A/B Chapter Notes - Chapter 5: Debt Service Coverage Ratio, Treasury Stock, Accounts Receivable

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Michelle Loveland

Document Summary

Usefulness of the statements of financial position and cash. Provides information about a company"s liquidity and solvency in order to assess the risk of investing in a company. Provides details about the company"s financial structure, such as whether it is financed primarily by debt or equity. One concern of users of financial statements is that company insiders might manipulate information to make earnings look better or worse than they are, for strategic reasons. Creditors often rely on the statement of financial position to assess a company"s liquidity and its ability to service debt. Statement of financial position (balance sheet): reports a business enterprise"s assets, liabilities, and shareholders" equity at a specific date. it helps in predicting the amounts, timing, and uncertainty of future cash flows. The sfp is useful for analyzing a company"s liquidity, solvency, and financial flexibility. Helps with analyzing the profitability, but not primary focus )