WHY PROFIT DOES NOT EQUAL CASH Why is profit not equal to cash coming in? Some differences such as loans received which do not impact the profit and loss statement are pretty obvious. Others may not be as obvious but you can break them down into three main areas: - Revenue is booked at sale. In many cases a sale is recorded for accounting purposes in the profit and loss statement when a company delivers a product or service. In many cases, no cash has been exchanged at the time of
is the cash aspect. The cash account was decreased constantly from 2002 to 2005. In 2005, the cash account only got 9,400 dollar which was below 10,000 dollar. This would make not enough cash to pay for suppliers. The risk of liquidity would be growth up. The inventory days increased every year from 2002 to 2005. In 2005, the inventory days was 476.3 which is much more higher than the benchmark of 386.3. As the result of this, there would be a higher inventory risk. 2.Calculate free cash flow to
Income statement An Income statement or profit and loss statement, indicated amount of profits generated by a firm over a given period, often 1 year in its most basic form, the income statement may be represented as follows : Sales Revenue – Expenses =Net income The income statement begins with sales or revenue, from which we subtract the cost of goods sold to yield gross profits . Next, operating expenses are deducted to determine operating income. Operating expenses includes marketing and
I.Issues Why does net income not equal cash flows? Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened? What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract? Of what
Caledonia Products Integrative Problem FIN/370 Finance for Business January 13, 2013 Caledonia Products Integrative Problem The following observation will describe the decisions made by a financial analyst who is working for the capital budget department at Caledonia Products. The organization has asked Team B to evaluate the potential risk involved in an upcoming transaction and identify several options in how to proceed. Because this is the team’s first assignments dealing with risk
DISADVANTAGES OF USINFG NPV (NET PRESENT VALUE) AND IRR (INTERNAL RATE OF RETURN)” NPV (NET PRESENT VALUE) The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield. NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation
I.Issues Why does net income not equal cash flows? Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened? What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract? Of what
total cost is equal or less than $1.50. What would be your recommendation to the pencil manufacturer? a) Increase production to decrease fixed costs per unit. b) Exit the business immediately. c) Continue production in both the short and long runs. d) Continue production in the short run, but exit the business in the long run unless prices are expected to rise or costs to fall. Question 4 (5 points) A pure monopoly refers to a situation in which: a) the firm 's profit is maximized
these and their purpose: Cash Flow Statement: A cash flow statement is a month by month statement of anticipated cash in against cash out. They assess the amount, timing and predictability of cash inflows and cash outflows and are used as the basis for budgeting and business planning. It provides a sharper picture of a company's ability to pay creditors and finance growth. Each section of the cash flow statement will give insight into your business activities and where your cash came from or where it
Financial issue: differences and similarities between for-profit and not-for-profit accounting. While for profit organizations and not-for-profit organizations are different in many ways, even down to the core of how and why they conduct business and operate, there are also some similarities about them. Some similarities even go into their accounting uses and methods. Because they both do monetary transactions, they must have some similarities; however because they are very different, they also