Essay on Accounting

2946 Words Apr 28th, 2015 12 Pages
SMT640
Group Research paper
Fall 2014

You have been named the Chief Financial Officer (CFO) of a two year old company, CUNY Analytics. Financials have been prepared by a bookkeeper. As CFO, you responsible for the preparation of accurate financials, analysis and review of the financials before they are released and communication of the results of your company to banks, investors, creditors and the government, as necessary.

Please complete the following:

a. What are the four major financial statements and, in depth, discuss their purpose.

The four major financial statements are the balance sheet, the income statement, the retained earnings statement and the statement of cash flows.

The Balance Sheet reports the company’s
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Overall, financial statements help determine the financial position of a company and help the users of the financial statements with their decision-making.

b. If an outsider is looking for the path of growth of your company, where would you direct them to look? What financials and financial information would they look at?

Natalie will need the balance sheet and the cash flow statement in order to evaluate whether Biscuits will be able to survive over a long period of time. These statements, if not already provided for her in the annual report, will allow Natalie to calculate solvency ratios. These ratios measure the ability of the company to survive over a long period of time. Natalie should look for a high solvency ratio because it means the company is more than likely to pay their debts.
In order to evaluate Biscuits’ profitability Natalie will need an income statement. The income statement reports the amount earned during the period, the costs incurred during the period and the net result. From this statement, Natalie, if its not already provided for her, can calculate and evaluate profitability ratios. These ratios assess a business’ ability to generate earnings while comparing it to the company’s expenses. One specific ratio she can use is the earnings per share to measure the

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