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Chapter 13

CHAPTER 13.docx

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Administrative Studies
ADMS 3920
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10252012CHAPTER 13 EVALUATING AND MANAGING FINANCIAL PERFORMANCEFinancial Statementreports of a firms financial performance and resources including an income statement a balance sheet and a statement of cash flows THE INCOME STATEMENTIncome Statementa financial report showing the profit or loss from a firms operations over a given period of time 1Revenue derived from selling the companys product or service2Costs of producing or acquiring the goods or services to be sold 3Operating expenses related to both marketing and distributing the product or service to the end consumer and administering the business4Financing costs of doing businessspecifically the interest paid to the firms creditors5Tax paymentsCost of Goods Soldthe cost of producing or acquiring goods or services to be sold by a firm Gross Profitsales less the cost of goods soldOperating Expensescosts related to general administrative expenses and selling and marketing a firms product or serviceOperating Incomeearnings before interest and taxes are paid This figure is important because it measures the financial attractiveness of a business opportunity Financing Coststhe amount of interest owed to lenders on borrowed money Net Incomeincome that may be distributed to the owners or reinvested in the company as retained earningsTHE BALANCE SHEETBalance Sheeta financial report that shows a firms assets liabilities and owners equity capital at a specific point in time 1Current Assetsliquid assets that can be converted into cash within a companys operating cycle Include cash accounts receivables inventories and prepaid expenses
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