These income statements are also useful for outside users such as investors, creditors and the government. Investors generally check the income statements of the company to verify the past financial performance of the business to evaluate their ability of producing future cash flows. Creditors also use the income statements to check and see if the business has enough revenue to pay its bills on time. Lastly, the government needs these statements to calculate the taxes which the corporation needs to pay regarding the profits earned over
Some of the very important factors are: Government stability effects businesses in a great range by competing with businesses to lower their costs, transparency is another important factor where anything the business does is revealed to the government and the government know exactly what they are up to. Economic policy of government on businesses is also a very essential factor that effects businesses for example, government sets up rules and frameworks according to which the businesses compete with one and another, so from time to time government changes these rules which forces the businesses to change the way of their set ups. There are also beneficial political factors that help businesses in various ways, these factors can be defined as apprenticeships and funding of schools and colleges which will enhance the skills of the population that will affect McDonalds in having more skilled workers to work for them which will
“We intend to retain our earnings to finance the expansion of our business and do not anticipate paying cash dividends in the foreseeable future……Dividend Payments are restricted by our bank credit facilities to 50% of our net income for the immediately preceding fiscal year.”i Cash Flow Statement Analysis: Krispy Kreme uses the Indirect Method of reporting Operating Cash Flows. In 2001 the cash provided by operating activities was $32,112 (Thousand), while the Cash dividends was $7,005 (Thousand). Cash provided by operating activities exceeded the cash paid for dividends. The company did not
This week we learned that companies are required to prepare a statement of cash flows because it gives a more accurate snapshot of the actual cash flow of a company. Financial statements give an overall picture of how much revenue a company is reporting, but high revenue does not guarantee that the company has the ability to pay its bills. The statement of cash flows is a tool designed to help external users make sound economic decisions about the company. The statement of cash flows is divided into three sections: 1) operating activities, 2) investing activities, and financing activities. The operating activities section analyzes the company's flow of cash as it relates to a net loss or net income.
Being able to track sales compared to the previous years’ numbers is a valuable tool in being able to track business. They use this information to forecast on where they think the business will be heading in the next week, month, or year. If the debt percent gets to high then they need to adjust the amount of liabilities that they have to bring that number down. Knowing the times interest earned ratio allows the managers to know at what percent the company is earning interest on its net income. Investors find this information lucrative because the more expendable cash a company has the more likely they are to pay out in dividends for the stock holders..
Financial markets are another element in our economy which the government once again has their hands in our pockets. We discuss the stock market, buying and selling stocks in order to make a profit or a loss. If a stock does not do well, the investors will sell in order not to lose
While theft and low income consumers bring the possibility of providing only moderate revenue gains, if not a loss, operating in impoverished areas can also be a source of growing potential for the business. Many companies advertise philanthropic missions, such as donating to charities every year or helping to provide for the families of their employees. While these are messages that consumers hear, a more powerful message can be the one that the consumers themselves see. Rather than closing down those stores, Company Q should focus on the reasons for the high crime, and offer ways to reduce that crime rate. Offering work programs that help prepare young people for management or skilled positions is a good way to take crime off of the streets while showing to the community that the business cares about the welfare of the population.
It requires reasonable business thinking to analyze if the stock will go up or down. Hence, it needs a portion of reading the recent news about the corporation. At least, I got an overview of how the stock market work by learning new business terms like short sell, margin, options, and many more. The stock market has influence me to be careful in buying shares from corporations. Stock market can either make me more money or lose more money.
The four financial statements therefore assist them to determine if their resources are being put into efficient use since this provides an indication of whether there is any risk they will end up losing the invested funds (Debarshi, 2011). Potential shareholders also rely on the financial statements to make a comparison of the performance of different entities before making important investment decisions (Taparia, 2004). Creditors Creditors supply goods and services to businesses on credit. They are mainly concerned with the liquidity of the firm and its ability to meet their obligations when they are due (Debarshi, 2011). They therefore rely on the balance sheet and income statement to determine the profitability and liquidity levels of different firms in order to make well grounded decisions relating to whether to go ahead and advance them goods and materials on credit (Debarshi,
Corporate Social Responsibility & The Law Individual Reflection Report With this journal I will reflect on my experience in processing the corporate social responsibility (CSR) concepts, why I feel CSR concepts are important and whether further action is required to ensure its continued importance. I found during the course that over the past decades CSR, and its effect on an organisation`s success has been the subject of much academic debate and criticism. Some people argue that CSR distracts from main purpose of business which is to make money. But, others consider that CSR does not reduce profit, it supports to gain financial improvements by strengthening organisation`s social responsibility. This reflective journal argues that Corporate Social Responsibility (CSR) is an important factor to achieve successful performance within organisation and it is also similar responsibility being financially successful.