ECO 1192 Lecture Notes - Lecture 6: Financial Accounting, Current Liability, Cash Flow
Document Summary
Income statement measures the flow of incomes and expenses over time (specified accounting period) Engineering economics: financial decision making for engineers by niall m. fraser and elizabeth m. Sources of funds: cash generated from regular business operations investment income (from bonds, stocks, etc) sale of long-term assets such a buildings, equipment. Application of funds: cash used to pay dividends to shareholders and interest-owing bonds purchase land, buildings, equipment, financial assets (bonds and stocks) of other firms. Management accounting analysis of the costs and benefits of business activities to provide managers with useful information for decision making. Analysis of financial statements working capital = current assets - current liabilities. Financial ratios: derived from financial statements calculation is easy but interpretation is more difficult. Comments liquidity: the higher the better liquidity quick assets = cash + accounts receivable + notes receivable + short term investments in marketable securities (excludes inventory and prepaid expenses, the higher the better.