BU283 Chapter Notes - Chapter 2: Accounts Receivable, Financial Ratio, Financial Statement
Document Summary
Bu283 chapter 2: financial statement and ratio analysis. Financial analysis: process of using financial information to assist in investment and financial decision making. Helps managers with efficiency analysis and identification of problem areas within firm. Helps managers identify strengths on which firms should build. Externally, analysis useful for credit managers evaluating loan requests and investors considering security purchases. Balance sheet: snap shot of firm at a particular point in time that shows its assets and liabilities. Investments = investments paid for with debt + investments paid for with equity. Assets generate income no reason to hold asset if it"s not going to produce income. Financing the assets every dollar in assets firm has, it"ll be dollar of liability of equity. Income statement: provides a financial summary of the firm"s operating results during a specified period. First reports results of operating activities or operating income (sales operating expenses)
