FIN 305 Midterm: FIN 305 Week 6 Notes
28 Oct 2015
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Document Summary
Financial snapshot, freezes actions of a business at a particular time. Prepared at date, usually end of month or year: when a statement is prepared at a point in time, it"s called a position statement. Financial position can be analyzed by assessing whether the business is in a healthy condition to survive and continue operating. 2 primary business performance criteria: liquidity and solvency: liquidity short term, solvency long term, both determine business" ability to pay its debts as they become due. Long term assets block: how much the business has invested in long term assets, not going to be converted into cash, used to produce goods to be sold to generate cash flow, eg. equipment. Long term financing block: highlights the cost amount of the business" long term financing and splits it between the amounts due to lenders (long term liabilities) and the amounts invested by investors (equities)
