Financial Management, 12th Edition by Pearson

CHAPTER 24

Financial Statements

LEARNING OBJECTIVES

• Understand financial statements—balance sheet and profit and loss account.
• Distinguish between accounting profit and economic profit.
• Discuss the meaning of funds flow and working capital flow.
• Highlight the need for analyzing the changes in a firm’s funds and cash flow position.
• Explain the mechanism of preparing funds flow and cash flow statements.
• Emphasize the need and utility of preparing a ­comprehensive statement of financial position that explains changes in cash flow from operations, investment activities and ­financing activities.

INTRODUCTION

The basis for financial planning, analysis and decision making is the financial information. Financial information is needed to predict, ...