Financial analysis and planning
PRICE-EARNINGS RATIO
This determine current value of the common stock
The P/E ratio indicates expectations of the future company
Investments represents a longer-term commitment of funds
Balance sheet indicates what the firm owns and how the asset are financed
Statement of cash flows
Emphasize the critical nature of cash flows operations of the firm
The value shown in the account is the fair market value
Inventory may he in the form
of raw material, godos in process or finished goods
Prepaid expenses represent future expense items
Economist defines income as the change in real worth in a specified time period
Topic Plant and equipment is carried at original cost minus accomulated depreciation
Asset accounts are listed in order of liquidity
Total assets are financed through either liabilities or stockholders equity
Marketable securities are temporary investments of cash
Stockholders equity minus the preferred stock components represents the net worth or book value
INCOME
STATEMENT
Major device for measuring
The statement is presented in a stair-step