1 / 9

Developing Management Skills

Developing Management Skills . Understanding Financial Statements. Why Use Them?. Business Survival Business Growth Business Profitability Decision-Making Internal Management Tool. For All Businesses?. YES! Not just for purpose of getting loans, or issuing stock

jariah
Download Presentation

Developing Management Skills

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Developing Management Skills Understanding Financial Statements

  2. Why Use Them? • Business Survival • Business Growth • Business Profitability • Decision-Making • Internal Management Tool

  3. For All Businesses? • YES! • Not just for purpose of getting loans, or issuing stock • Should be used to support all business decisions • Prepared in standard manner • Generally Accepted Accounting Principles (GAPP) – standards/guidelines to ensure information is reliable and understandable

  4. Key Financial Statements • Balance Sheet • Income Statement • Cash Flow Statement

  5. Balance Sheet • Company’s financial position • Financial “health” • Also called “statement of condition” or “statement of financial position” • Referred to as “photograph” of business- is a snapshot of financial position at particular moment in time • Balance sheet changes as business position changes!

  6. Parts of Balance Sheet I. Assets - what a business owns Current Assets- cash or anything that will be converted into cash within one year ( marketable securities, accounts receivable, and inventories) Fixed Assets- also called long-term assets- more permanent items with life of more than one year (buildings, major equipment) Assets are recorded in accounting system as debit balances

  7. Parts of Balance Sheet II. Liabilities – what a business owes Current Liabilites- must be paid within a year or less. (Accounts payable- inventories, rent, utilities, etc.; accrued wages, and current portion of longer- term notes payable) Long Term Liabilities- items that do not mature within one year (bank loans, mortgages, other longer-term obligations. Liabilities are recorded in accounting system as credit balances

  8. Parts of Balance Sheet III. Net Worth – difference between the value of assets and value of liabilities • For Publicly traded companies, this is also called “shareholder equity”. • If value of assets exceed liabilities business has positive net worth • If value of assets is LESS than liabilities business has negative net worth

  9. Class Activity • Divide into groups of 2-3 people • Research balance sheets on the Internet • Review “simple” balance sheet samples for better understanding • Create a template for a balance sheet for school store. The marketing teacher will give basic financial information for this • Send balance sheet to mbelote@lcps.org • 50 Points

More Related