Financial Management Theory and Practice Essay

A- Annual report - its a avouchment that gives an story picture of a sign of the zodiacs operation and its financial position , there is deuce types of education argon provided in annual reportFirst - the oral section witch often represents the firms operation result during the past both old age or any period , and discuses new developments that will takings future tense operation . and explain why things turned out the charge they did .Second - the presentation for quadruplet basic financial statements ( the balance tag end , the income statement , the statement of retain earnings and the statement of cash flows). these quadruple statements illustrate (what has actually happened to assets , earnings , and the dividends over the past few years .These information is used by investors to help form an expectation close the future earnings of the firm and dividendsB- Balance sail - its a snapshot of firms financial position in the last day of given over period . and a ba lance ragtime changes daily because of- * Inventories are bought and sell .* Fixed assets are added or retired .* A bank give balances are increased or paid down.Its composite of a table of devil sides -The left side of a balance sheet lists assets (which are the things that gild owns) in order of liquidity or the length of time ,The compensate side lists the claims that ( supplies , banks , bondholders , stockholders ) have against conjunction and they must be paid in order ) .C the income statement - reflects the financial performance over apiece of a given period of time ( monthly , quarterly and per year ) . witch contains net sales excluding (EBITDA) .which means earning before interest , taxes , depreciation and amortization .D- depreciation - its a policy applies by accountants , rather than underwrite the entire purchase of assets in a purchase year , they grapple the expenses of assets by the assets useful life , in many years subsequently , and it calculates in tangible assets in balance sheet .E- Net expense or special K equity - its the asset net of liabilities and labor union of common stocks and retained earnings , In case a companys assets are sold and liabilities and preferred stocks were actually worth their news value , then the company in case of bankruptcy puke sell its assets to compensation liabilities and preferred stocks and remaining cash would belong to common stakeholders .F- (EBITDA) - its earning before interest , taxes , depreciation , and amortization .G- STATEMENT OF CASH string up - represents a claim against assets , instead of distributing the money as dividends , they spend it on buying new assets .H- The statement of cash flow - its the bill of cash reported on its year-end balance sheet , it rotter be used in variety of ways , (pay dividends , increase inventories , control it in bank , or to invest in indomitable assets .(3-2) what four statements are contained in annual report ? coif -1- the balanc e sheet ,2- the income statement ,3- the statement of retained earnings4- the statement of cash flowsThese information is used by investors to help form an expectation about the future earnings of the firm and dividends . (3-3)If a typical firm reports $20 jillion of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without any qualms whatsoever?Answer -No , because the retained earning could be used in variety of ways , like pay dividends , increase inventories , keep it in bank , or to invest in fixed assets .(3-4)Explain the following statement While the balance sheet can be thought of as a snapshot of the firms financial position at a point in time, the income statement reports on operations over a period of time.Answer -Because the balance sheet changes daily as inventories are bought and sold , fixed assets are added or retired , or as a bank loan balances are increased or paid down . while the income statement is the financial pe rformance of a firm during that period , and its more on the button to analyze . (3-5)What is operating capital, and why is it important?