T Asset turnover
can be established by combining long-term funds in the balance
sheet with sales in the income statement
T Profit margin
can be established by combining sales in the income statement
with profit in the income statement
T Cash flow
can be established by combining cash receipts and cash payments
in the cash flow statement
The bare bones
The balance sheet, income statement, and cash flow
statement must be continually monitored and analyzed
if a business is to deliver a healthy return on equity.
How can financial statements
be used to help manage a business?
Not only can financial statements tell us a how a company is
progressing, they can also provide information that management can
use to enhance the return to shareholders in the future.
T Balance sheet
The balance sheet provides information on two issues that can
have a dramatic impact on the need for shareholders’ funds:
I It shows how funds have been invested in assets
I It shows how funds have been raised
Management should use this information to keep assets to a
minimum (but without jeopardizing sales), thus keeping the
need for shareholders’ funds to a minimum. Also, gearing
should be maintained at appropriate levels to provide a
reasonable return to shareholders, while not exposing the company
to unnecessary risk
can be established by combining long-term funds in the balance
sheet with sales in the income statement
T Profit margin
can be established by combining sales in the income statement
with profit in the income statement
T Cash flow
can be established by combining cash receipts and cash payments
in the cash flow statement
The bare bones
The balance sheet, income statement, and cash flow
statement must be continually monitored and analyzed
if a business is to deliver a healthy return on equity.
How can financial statements
be used to help manage a business?
Not only can financial statements tell us a how a company is
progressing, they can also provide information that management can
use to enhance the return to shareholders in the future.
T Balance sheet
The balance sheet provides information on two issues that can
have a dramatic impact on the need for shareholders’ funds:
I It shows how funds have been invested in assets
I It shows how funds have been raised
Management should use this information to keep assets to a
minimum (but without jeopardizing sales), thus keeping the
need for shareholders’ funds to a minimum. Also, gearing
should be maintained at appropriate levels to provide a
reasonable return to shareholders, while not exposing the company
to unnecessary risk
0 comments:
Post a Comment