Business Administration 1220E Study Guide - Midterm Guide: Current Liability, Pest Analysis, Retained Earnings

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Raza Khan

Document Summary

When assets decrease (source) > assets are sold and you receive cash. When assets increase (use) > you gain an asset but are using cash to do so. When liabilities increase (source) > you take on a loan, you receive cash but are liable to pay the loan back. When liabilities decrease (use) > you pay off a loan therefore your liability decreases and you use your cash. Three sections on a scf: operations > shows how much cash is being generated by, and spent on, regular daily operations. 2. financing activities > shows how much cash was generated through financing activities (debt or equity) 3. investing activities > shows how much cash was used or generated from investments (looking at fixed assets) Interpreting the scf: five questions to ask: was cash generated from operations? (is the engine of the business running?) Vertical analysis expresses soe items as a percentage of net sales.