Management and Organizational Studies 2310A/B Chapter Notes - Chapter 2: Operating Cash Flow, Market Liquidity, Cash Flow

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

Document Summary

Statement of financial position: financial statement showing a firm"s accounting value on a particular date, also known as balance sheet: assets, current vs. Liabilities: current vs. lt, bond or bondholders for lt debt and liability. Equity: common, shareholder"s or owner"s, now under ifrs if publically traded since 2011, unrealized appreciation in owning property will not be recognized as income, matching principle of revenues and expenses. Income reported when its earned or accrued even though no cash flow has occurred: difference between current assets and current liabilities is net working capital, should be positive in a healthy firm. Liquidity: the speed and ease at which an asset can be converted to cash. Ease of conversion vs. loss of value: a highly liquid asset can be sold quickly without significant loss of value, most liquid assets are listed first. The more liquid a business is the less likely it is to experience financial distress.