Management and Organizational Studies 2310A/B Chapter Notes - Chapter 3: Reserve Requirement, Financial Statement, Cash Flow

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Shang Tang

Document Summary

Sources- generate cash: cash inflow- occurs when we sell something, decrease in asset account. Increase in liability or equity account: uses- cash is spent, cash outflow- occurs when we buy something. Increase in asset account: decrease in liability or equity account. Statement of cash flows: statement summarizes the sources and uses of cash, changes divided into 3 major categories, operating activity- includes net income and changes in most current accounts. Financing activity- includes changes in notes payable, long-term debt and equity accounts as well as dividends. Firms ability to pay its bills over the short-run. Focus on current assets/liabilities: long-term solvency or financial leverage ratios. Firms ability to meet its obligations (financial leverage: asset management or turnover ratios, how efficiently or intensively a firm uses its assets to generate sales, how quickly we can collect the sales, profitability ratios. Intended to measure how efficiently the firm uses its assets and how efficiently the firm manages its operations.