Professional Documents
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Activity Financial
Activity Financial
Your Answer:
It provides a general overview of the company's performance in terms of opportunities and
increasing revenue, improving customer satisfaction, by focusing on the financial results to
be able to sustain the organization in the long run.
Your answer:
When the revenue is higher than the debt and also assets should always be equal to the
sum of liabilities and owners’ equity.
3. What are the four main reports of financial statements? and what do they show?
Explain each report briefly but substantial information.
Your Answer:
First is the Balance Sheet where the liabilities and assets are written and give the financial
flow of the company and how the company runs the organization, also if it's sufficient to
operate or take investment, while the second is the Cash Flow Statement depicts how
cash flows in and out of a business over a specific time period. It also accounts for
changes in working capital, such as accounts receivable and payable. Third is the
Income Statement which summarizes a company's revenue and expenses over a specific
time period, usually a quarter or a year. The income statement begins with revenue and
then deducts the cost of goods sold, operating expenses, and other expenses to arrive at
the company's net income or loss. The income statement provides information about the
company's profitability and is an important tool for assessing its financial performance.
Fourth the statement of changes in equity is a financial statement that shows how a
company's equity has changed over time. After all, liabilities are deducted, equity
represents the portion of a company's assets that belong to its owners or shareholders.
Your Answer:
If a company is solvent, it can meet its long-term financial obligations, such as debt
payments and other liabilities. In other words, a solvent company has enough assets to
cover its debts and is not in danger of going bankrupt.
A company, on the other hand, is considered liquid if it has enough cash or easily
convertible assets to meet its short-term obligations, such as paying bills, salaries, and
other expenses, as they come due. A highly liquid company can quickly and easily convert
its assets into cash to meet its financial obligations.