Financial Statement Analysis and Cash Flow Principles
1) Operating Activities: The indirect method for preparing the statement of cash flows involves adjusting net income with changes in balance sheet accounts to determine cash generated from operating activities.
2) Investing Activities: Cash flows from investing activities are crucial, representing a significant source or use of cash, especially in capital-intensive industries like manufacturing. Persistent negative cash flows for fixed assets may indicate growth and expected returns on investments.
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The Basic Research Process
Quantitative research involves formulating a problem, developing assumptions (hypotheses), and defining variables. The process includes analyzing variable distribution, examining cross-variable relationships to test hypotheses, and conducting a comprehensive analysis using tables and graphs.
Festinger and Katz’s Sample Survey Development
- Establish the problem and define overall objectives.
- Specify data objectives and assumptions.
- Define sample type, size, and composition.
- Design
Effective Inventory Management: Classes, Critical Factors, and Costs
Item-16 Inventory Management Concept
Inventory is a collection of items accumulated or stored, pending subsequent use or claim.
Main Function
To balance the flow of production and the flow of demand across different timeframes. Inventories (raw materials, work in progress, etc.) represent around 20% of the total assets of Spanish companies. Therefore, inventories are critical assets impacting profitability, liquidity, and business taxation.
Inventory-related decisions are crucial for coordinating production,
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Cost Accounting System for Specific Orders
This system is used by businesses that produce goods on a per-order basis, allowing for the separation of production into distinct batches. Upon receiving an order, a production order is issued, detailing customer requirements such as item type, quantity, customer name, designs, and specifications.
Registration and Monitoring of Direct Materials
This process tracks the direct materials from the initial request to the supplier through their use in production.
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Primary Sources
Internal primary sources gather information from company data, while external sources utilize data from the business environment. Quantitative methods offer structured, statistically representative results. Qualitative techniques, conversely, don’t employ statistical treatment for population representation but provide richer descriptive data. Quantitative techniques use numbers for classification, correlation, and comparison, yielding objective, accurate, and reliable information.
Read MoreFinancial Statement Analysis & Key Formulas
Financial Statement Analysis
Key Statements
Income Statement: List all revenues and expenses (cost of goods sold included).
Balance Sheet: List all assets (in order of liquidity). List all liabilities (in order of liquidity) and Stockholders’ Equity (SHE) (preferred stock, common stock, additional paid-in capital, retained earnings, treasury stock).
Statement of Cash Flows: Cash flow from operating activities (cash received, accounts receivable/payable, cash paid, income/salaries). Cash flow from investing
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