Embracing cash flows - Dissertation Example

Even the liquidity of a firm is well understood by these ratios. 4g: Key readings for your research design? Internet sources Part 5: Time Management and Location: 5a: Location: UK 5b: Schedule and time planning: for a week Internet book reading for 3 hours every day I have gone through the financial statements of the companies and their analysis for the next 5 hours per day. Introduction: Businesses of late are experiencing many ups and downs in their longevity. The amusing truth is the non-explanation of such contingency to the investors till the last minute as in the case of W.T. Grant which declared its bankruptcy within months of healthy financial reporting.

Finally, the investors, creditors and other stakeholders stand to lose because of such non-delivery of information. The onus could be rested on the Income statement and Balance Sheet which form a part of financial statements. They are based on the accrual form of accounting due to which real income figures are somewhat disrupted. To avoid this confusion, Cash Flow statements were included into the Financial Statement reporting. However, mere statement of facts cannot help as long as meaningful conclusions are not derived from such reports.

Hence, ratios have to be derived of such statements. Cash Flow Ratio as a Measure of Performance: Understanding the fact that mere statement of facts is not enough, financial ratio analysis was developed long back and many accountants excel in such measures to this day. But, it has been observed that the regular current and quick ratios are all the more dependent on the base of accrual system as the financial statements themselves. As such, their analysis is not depicting the right picture at.

Businesses of late are experiencing many ups and downs in their longevity. The amusing truth is the non-explanation of such contingency to the investors till the last minute as in the case of W.T. Grant which declared its bankruptcy within months of healthy financial reporting. Finally, the investors, creditors and other stakeholders stand to lose because of such non-delivery of information. The onus could be rested on the Income statement and Balance Sheet which form a part of financial statements.

They are based on the accrual form of accounting due to which real income figures are somewhat disrupted. To avoid this confusion, Cash Flow statements were included into the Financial Statement reporting. However, mere statement of facts cannot help as long as meaningful conclusions are not derived from such reports. Hence, ratios have to be derived of such statements.Cash Flow Ratio as a Measure of Performance: Understanding the fact that mere statement of facts is not enough, financial ratio analysis was developed long back and many accountants excel in such measures to this day.

But, it has been observed that the regular current and quick ratios are all the more dependent on the base of accrual system as the financial statements themselves.As such, their analysis is not depicting the right picture at crucial points. To develop the right analysis, it is understood that the base itself should be transformed. Instead of accrual accounting base, if the cash flows realized were taken as a base, then the analysis would be more expressive.