This enables the company to better match its inflows and outflows. However, this also means that much of what constitutes earnings is not a direct, immediate cash flow. There are a number of items that will appear on an income statement that are either flows that have already occurred, or are flows that have not yet occurred. However, because the transaction was based in that quarter or year, it appears on the income statement. Earnings, therefore, are intended to reflect the firm's economic activity for the period, not its cash flows.
Cash flow forecasts outline what the firm will have left over after it collects all of its money for the period and pays out all of its expenses (Forsythe, 2006). Because this measures the firm's economic activity, it can be used as an alternative to earnings in evaluating a firm's performance for the period. A cash flow forecast, by…...

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Works Cited:

Business Week. (2005). Why GM's plan won't work. Business Week. Retrieved May 23, 2010 from  http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm 

Chen, M. (2007). ABC of cash flow projections. International Construction Cost Engineering Council. Retrieved May 23, 2010 from  http://www.icoste.org/AACE2007%20Papers/Nashville_pm02.pdf 

DeFong, M. & Hung, M. (2007). Investor protection and analsyts' cash flow forecasts around the world. Review of Accounting Studies. Vol. 12 (2-3) 377-419.

Forsythe, G. (2006). Cash flow vs. earnings: Which is more meaningful? Charles Schwab. Retrieved May 23, 2010 from  http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/stocks/cash_flow_vs_earnings_which_is_more_meaningful.html

Each section of the cash flow statement tells a different part of the firm's story. For example, it may be understood by management that significant amounts of their profits went into new buildings and equipment. What the cash flow statement does is isolates that information. Management and shareholders alike can extrapolate that data from the balance sheet, noting changes in fixed assets, but the presentation of the cash flow statement provides a clean, easy-to-understand summary of those transactions.

The same situation occurs with regards to financing activities. These can have a dramatic impact on the firm's cash position. The firm's bank account may look much healthier after a year in which stock was issued, but the cash flow statement allows management and investors to understand the role that stock issue played in the improved bank balance.

This is critical to understanding whether the firm is improving its cash position through strong operations…...

863 billion, then decreased it in 2007 by $603 million. Last year, with the stronger flows from operations and decreased stock retirement, they increased their cash position by $4.288 billion.
As with Microsoft, Sony has seen a strong increase in cash flows from operations over the past three years. They have increased 89.4% from ¥399 billion to ¥757 billion. This improvement is only partly attributable to top line improvement, as Sony's starting line hardly improved at all in 2007. Instead, that year saw a significant shift in the change in working capital. With regards to investing activities, Sony has not increased its capital expenditures over this time period. Also unlike Microsoft, Sony has seen significant capital outflows in all three years from its investments. They have enjoyed inflows from other activities, but not enough to offset the increasing losses. Sony has consistently been able to increase its cash flows from financing…...

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Over the past three years, Microsoft has steadily improved its cash flows from operating activities. The starting line has improved dramatically over this period, from $12.599 billion to $17.681 billion. Consequently, cash flow from operating activities has also improved, from $14.404 billion in2006 to $21.612 billion in 2008.

The company's cash flow from investing activities, however, has declined. They have increased their capital expenditures over the past three years from $1.578 billion to $3.182 billion. Microsoft has seen a decline over the past few years in cash flows from investments, from $10.23 billion to $6.648 billion. "Other outflows" saw a huge spike in 2008 from $1.15 billion to $8.053 billion, which resulted in the significant outflows last year from investing activities. Microsoft has consistently retired stock over the past several years. In the stronger markets of 2006 and 2007 it was able to retire $17.1 billion and $20.793 billion respectively. They scaled this program back in 2008, however, in the face of weaker markets. They only retired $9.039 billion in stock last year. The result of all this is that over the past three years, there has been significant fluctuation in Microsoft's cash position. They increased cash flow in 2006 by $1.863 billion, then decreased it in 2007 by $603 million. Last year, with the stronger flows from operations and decreased stock retirement, they increased their cash position by $4.288 billion.

As with Microsoft, Sony has seen a strong increase in cash flows from operations over the past three years. They have increased 89.4% from ¥399 billion to ¥757 billion. This improvement is only partly attributable to top line improvement, as Sony's starting line hardly improved at all in 2007. Instead, that year saw a significant shift in the change in working capital. With regards to investing activities, Sony has not increased its capital expenditures over this time period. Also unlike Microsoft, Sony has seen significant capital outflows in all three years from its investments. They have enjoyed inflows from other activities, but not enough to offset the increasing losses. Sony has consistently been able to increase its cash flows from financing activities. 2008, however, saw a strong spike in cash flows from financing activities, from ¥172 billion to ¥510 billion. Overall, the strength of Sony's improvement in cash flows from operations, in particular with respect to its starting line, has resulted in a steady increase in cash flows over the past three years. In 2006, Sony saw ¥76 billion in outflows. In 2007, this turned around, to ¥96 billion in inflows. Last year, inflows had improved to ¥286 billion.

Cash Flow
The different authors use a number of quantitative approaches to understanding firm performance. Paunovic (2013) discusses the pricing and valuation of swaps. The author seeks to "demystify the structure of these financial derivatives (swaps) by presenting their valuation methods and by showing how they are used in practice." Thus, the author is presenting textbook explanations of swaps to her audience. Swaps are priced at par at the present time. The counterparties are swapping fixed rate obligations for floating rate, and make differential payments. Neither party would enter into the agreement at an unfavorable rate, but over time the changes in interest rates will mean that one party or the other will pay more. The floating rate is often based on LIBO, or other common floating rate. Since banks are almost always intermediaries in swaps, they might seek to take a spread on the rate. Thus, a company setting up…...

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References:

Enekwe, I., Okwo, M. & Ordu, M. (2013). Financial ratio analysis as a determinant of profitability in Nigerian pharmaceutical industry. International Journal of Business and Management. Vol. 8 (8) 107-117.

Engsted, T. & Pedersen, T. (2010). The dividend-price ratio does predict dividend growth: International evidence. Journal of Empirical Finance Vol. 17 (2010) 585-605.

Giacotto, C., Golec, J. & Vernon, J. (2011). New estimates for the cost of capital for pharmaceutical firms. Journal of Corporate Finance. Vol. 17 (2011) 526-540.

Paunovic, J. (2013). The pricing and valuation of swaps. Singidunum Journal. Vol. 10 (1) 39-45.

Cash Flow Analysis
Discuss Cash Flow And Its Analysis

Financial Leverage

Financial leverage refers to the use of a company's assets and liabilities targeting to earn profits upon balancing the risks associated. Financial leverage follows the argument in physics of lever where little force is used to lift heavy objects. Financial leverage uses debts and stock (Preferred stock) to increase earning. Leverage is a significant measure that financial institutions use to increase benefits though it comes with risks.

Benefits and risks of financial leverage

Use of financial leverage increases the earning and thus, higher profits for a financial institution. In cases where a company successfully uses leverage their credit rating increases since it a demonstration of how well they can tackle risks related to debt. Other benefits include efficiencies in scale of operations and higher cash flows.

Use of financial leverage puts an institution in risk of insufficient operation income. The leverage incurred is always a…...

A second challenge organizations face with cash flow management is being realistic with the amount of time it will take for them to receive revenues. This negatively affects cash flow projections that Sprague illustrates as being very important to a company's success. Companies are become slower and slower to pay their vendors, with 45 to 60 days becoming more the norm than the traditional 30 days, according to Feldman, as cited by Spargue. The third and final challenge to cash flow management is the lag in time between when payment to suppliers and employees comes due and the time in which revenues are received from customers.
Summary:

Sprague (2008) gives a fairly comprehensive overview of cash flow, with this article. The author begins with the history of cash flow reporting and the cash flow statement. Sprague describes how cash flow reporting has transformed from being an option that had begun to…...

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References

Sprague, C. (2008). Cash flow. Research Starters. Retrieved May 26, 2009, from EBSCO Research Starters.

Walgreens' cash flow using its 2011 annual report. Currently ranked as the largest drugstore chain in the U.S., Walgreens had its beginnings in 1901 when Charles . Walgreen bought the Chicago drugstore where he worked as a pharmacist. Over the next two decades, Walgreen bought 20 additional stores, adding such features as soda fountains with luncheon service, as well as his own line of drug products. The company added its first photofinishing studio in 1919 and introduced the malted milkshake at its fountain counters in 1922. By 1925, Walgreens had 65 stores with total annual revenue of $1.2 million. Walgreens' sales passed the $1 billion mark in 1975, and the company continued its growth and innovation to its current position of leadership in the retail pharmacy industry (Funding Universe, n.d.). With record profits of $2.7 billion in fiscal year 2011, Walgreens filled 819 million prescriptions, a figure that equates…...

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Reference List

Funding Universe. (n.d.). Walgreen Co. Retrieved March 28, 2012 from:  http://www.fundinguniverse.com/company-histories/Walgreen-Co-Company-History.html 

Moody's Investors Service. 2009. Moody's rating symbols & definitions. Retrieved March 28, 2012 from: http://www.moodys.com/sites/products/AboutMoodysRatingsAttachments/MoodysRatingsSymbolsand%20Definitions.pdf

Moody's Investors Service. 2011. Moody's changes Walgreen's outlook to negative. Retrieved March 28, 2012 from: -- PR_226181http://www.moodys.com/research/Moodys-changes-Walgreens-outlook-to-negative

Standard & Poor. 2011. Long-term ratings, ratings outlooks, and short-term ratings. Retrieved March 28, 2012 from:  http://www.standardandpoors.com/aboutcreditratings/

accounting income and cash flow? Which do we need to use when making decisions by using NPV? Explain in short.
Accounting income takes in consideration total profits; which is usually some form of total revenues minus total expenses. Cash flow is a totally different concept because it doesn't necessarily account for total income, rather it just accounts for cash out flows and in flows. For example, it may not account for various administrative costs or wages that are paid to employees and it may not account for the total income of the organization but just for one specific project.

A positive NPV is a good start -- now we need to take a closer look

Forecasting risk: How sensitive is our NPV to changes in the cash flow estimates; the more sensitive, the greater the forecasting risk (explain which conditions we accept the risk for both investors and company point view).

Investors generally…...

Based on a large sample of firms from different countries after adopting IASB cash flow accounting, firms evidenced "less earnings management, more timely loss recognition and more value relevance of accounting data" than firms without IASB standards (Morais & Curto 2008). The drive towards greater homogenization of international standards has lead the United States FASB (Financial Accounting Standards Board) to consider the IASB's call for a shift to cash flow methods for all organizations. The justification for this is that accruals are more subject to dishonest practices "since every accrual requires certain assumptions and estimates… when a firm completes a sale on credit, it must estimate the likelihood that the cash will be received, when the receipt will take place, and if full payment is uncertain, how much should be reflected on the income statement. None of these issues arise when the sale is for cash" and a firm…...

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Works Cited

"Cash vs. accrual accounting." INC. April 24, 2000. September 4, 2009 at  http://www.inc.com/articles/2000/04/19194.html 

Morais, Ana Isabel & Jose Dias Curto. "Accounting quality." Revista Contabilidade & Financas.

19.48: (September/December 2008). September 4, 2009 at  http://www.scielo.br/scielo.php?pid=S1519-70772008000300009&script=sci_arttext 

"Will global accounting rules help or hinder accuracy?" Knowledge @ Emory.

Cashflows
The cash flow statement is a critical tool for financial planners and analysts interested in assessing the health and wellness of a company from a financial and operational perspective. The statement of cash flows provides information about the cash payments received by a company during a defined period; the amount that should be received from cash receipts is also reported (Kieso, Weygandt, & Warfield, 2007). This is critical information a company needs to determine how well their products and services are doing. The cash flow information assesses whether products and services are bringing in revenues for the company. Cash flow does not includes revenues coming in as interest or credit however, for the month the receipt is issued say for the charge incurred, or when the loan is given. There is a system of checks and balances. The system in place is highly organized to capture a big picture sense…...

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References:

Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2007). Intermediate accounting (12th ed.). Hoboken, NJ: John Wiley & Sons.

Glantz, M. & Mun, J. (2011). Cash Flow Analysis. Credit Engineering for Bankers 2nd Ed. Pp. 99-128.

Wilkins, MS. & Loudder, M.L. (2000 Spring). Articulation in cash flow statements: A resource for financial accounting courses. Journal of Accounting Education. 18(2): 115-126.

, 2009). Similar adjustments are made for items, such as expenses, taxes etc. (Stickney et al., 2009).
The second section shows the cash inflows and outflows from investing. The figures shown are the changes that have occurred on the previous year. For example, if the firm makes a capital investment, the cost of that investment will be an outflow. If there is revenue created by an investment, such as the sale of the asset, this will be a cash inflow (Stickney et al., 2009).

The third section is the financing. The main components are the changes in debt; increased debt creates a cash inflow, whereas paying off debt creates an outflow. Any capital that comes into the firm or leaves the firm is included in this section. If dividends are paid, they will be a cash outflow in the financing section. The cash flow statement will end with a net total of…...

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References

Kimmel, Paul D; Weygandt, Jerry J.; Kieso, Donald E, (2010), Financial Accounting, Wiley

Stickney, Clyde P; Weil, Roman L; Schipper, Katherine; Francis, Jennifer, (2009), Financial Accounting: An Introduction to Concepts, Methods and Uses, South-Western College Publishers

After considering the material provided by both the FSO Technologies
and Bank of America tutorials, it becomes increasingly clear that the key
to long term financial viability is projection and planning. In the case
of the childcare center, the tutorial advised that once one has clearly
mapped out a cash budget which compares expected cash inflows and outflows,
one can begin to make meaningful incremental and longterm changes in
spending and pricing. As the childcare center director, I would be in a
unique position of insight to administrate a consideration of all the
utilities, employees, facilities, marketing and petty expenses which
constitute our overall budget. This would also allow me to detect places
where expenses can be reduced or where more is needed.
By combining this with a projection of future cash needs, I would be
in a position to assess the true nature of our overall cash flow situation.
This would allow me to make management decisions according to a lucid and
empirical…...

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Works Cited

FSO Technologies. (2008). Recordkeeping and Cash Flow: Effective

Techniques. GoFSO. Online at  

Records.html#Ehttp://www.gofso.com/Premium/BS/fg/fg -

Virtual Advisor. (2008). Managing Your Cash Flow. Bank of America.

Online at  

interactive.com/bankofamerica/resourcecenter/workshops/cashflow/cashflow.htmhttp://www.va -

Free Cash Flow
In order to make a capital budgeting decision, the company must identify the incremental free cash flows associated with the project, particular for long-term projects that require the cash flows to be treated to account for the time value of money (NetMBA, 2010). A free cash flow is defined as "the cash that a company is able to generate after…" the initial expenditure (Investopedia, 2012). The first step is to eliminate the obvious non-incremental flows such as pre-existing overhead, sunk costs and non-cash flows like depreciation.

ithin these issues, the process is not always simple. For example, many managers find overhead determinations to be difficult. The underlying principle is that the overhead the manager needs to take into account is the overhead that is incremental to the project, for example if new support staff are added. Diversion is an area that is tricky, however. Resources diverted from other areas…...

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Works Cited:

Investopedia. (2012). Free cash flow. Investopedia. Retrieved February 17, 2012 from  http://www.investopedia.com/terms/f/freecashflow.asp#axzz1mTnfyQdS 

Keown, (2012). Cash flows and other topics in capital budgeting. Chapter 10. Retrieved February 17, 2012 from https://docs.google.com/viewer?a=v&q=cache:6f_R0tsMBWwJ:www.cob.sjsu.edu/zaima_j/spring09/Keown_FinMgmt10_IM/Chapter%252010%2520IM%252010th%2520Ed.doc+capital+budgeting+free+cash+flow&hl=en&gl=us&pid=bl&srcid=ADGEESigsLsTtrVXj4pRLVKg4BfHeinQasOYbkhaiwqphSsdXEqvXmGpx_H649yELoXObPW99ui6BUSV6tI8RMadlJQLbq-z9obcgpf7IT7PXq3Tfibv7QS6PZs-ZF1G_9ZPwNmhWuql&sig=AHIEtbQTcZ0ZxCKJ8rnmdNHk6No_XAWj8g

NetMBA.com. (2010). Capital budgeting. NetMBA.com. Retrieved February 17, 2012 from  http://www.netmba.com/finance/capital/budgeting/ 

Peavler, R. (2012). Capital budgeting and its importance in business. About.com. Retrieved February 17, 2012 from  http://bizfinance.about.com/od/Capital-Budgeting/a/capital-budgeting-overview.htm

Walgreens Liquidity and Cash Flow
The Management's Discussion and Analysis, together with the Consolidated Statement of Cash Flows and Notes, provide insight into the company's sources and uses of cash.

Over the two-year period for the years ending August 31, 2009 thru 2011, the company has seen large cash outflows which affected its cash position and its liquidity. Net cash provided by operations declined from $4.1 billion in 2009 to $3.6 billion in 2011. Cash provided by operations was the principal source of funds for the Duane ead acquisition, for expansion, remodeling programs, shareholder dividends and stock repurchases (Walgreens, 2011).

Walgreens management attributes the decrease in net cash provided by operations to higher working capital. In part the cash flow decrease in working capital was offset by higher earnings, which increased by $708 million over the two-year period (Walgreens, 2011).

Walgreens' cash and cash equivalents have trended down from $2.1 billion in 2009 to…...

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Reference List

Chang, S. (2011). Moody's cuts Walgreen's outlook to negative. Market Watch, Wall Street Journal. Retrieved from http://articles.marketwatch.com/2011-09-16/news/30909570_1_rating-outlook-walgreen-and-express-scripts-moody-s-investor-service

Moody's Investors Service. (2012 January 5). Moody's places Walgreen's ratings on review for possible downgrade. Retrieved from -- PR_234601http://www.moodys.com/research/Moodys-places-Walgreens-ratings-on-review-for-possible-downgrade

Walgreens 2011 Annual Report. (2011). Retrieved from http://files.shareholder.com/downloads/WAG/1738348465x0x513852/74B4B167-0B5C-46D3-A0A4-6435CEC99183/WALGREENS_2011_AR.pdf

Equity, Cash Flow, And Notes Analysis for the General Electric Company
Regarding the specific components of the Statement of Changes in Owner's Equity and Statements of Cash Flows, from line items to balances

General Electric still stands tall in the public's estimation and in its international reputation as a pioneer of Six Sigma management policies regarding internal quality control. (Six Sigma, 2004) According to its annual report, GE Share owners' equity increased $8.9 billion, $4.3 billion and $7.9 billion in 2002, 2001 and 2000. Thus, the performance of the General Electric company in sheer dollar terms continues to improve, not simply as a statistical blip between the current financial year and the financial year of the past, but steadily, and over time. The increases were largely attributable to net earnings of $14.1 billion, $13.7 billion and $12.7 billion. These increases were only partially offset by dividends declared of $7.3 billion, $6.6 billion…...

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Works Cited

GE Consolidated Statement of Changes in Shareholder's Equity. (2004)

 http://www.ge.com/ar2002/financial/statements/equitychanges.jsp 

GE Management's Discussion and Analysis. (2004)

 http://www.ge.com/ar2002/financial/md_and_a/equitychange.jsp

Home Depot, like most big companies, carries a lot of debt. It can reduce debt by raising prices or paying lower wages, but those aren\'t going to work as long term solutions. To avoid shortchanging customers, which can really cause cash flow problems, Home Depot will need to reduce its spending in a way that doesn\'t affect customers. That can mean restructuring, refinancing, closing stores that are not profitable, lowering the salaries of top executives, and finding related ways to spend less while continuing to keep money coming in. Other stores have done this successfully. You may want to start....

As a behavioral health entrepreneur, it is crucial to utilize various methods of analysis to determine which strategies are the best for your business. These analysis methods can help you make informed decisions, understand your target audience, and drive effective outcomes. Here are some key methods to consider:

1. SWOT Analysis: Conduct a comprehensive assessment of your business's strengths, weaknesses, opportunities, and threats. This analysis will provide insights into your competitive advantage, internal challenges, market potential, and potential risks.

2. Market Research: Gather data and insights about your target audience, competitors, market trends, and customer preferences. This analysis will enable you to....

Principles of Business Essay Topics

Ethics and Social Responsibility

The Importance of Ethical Decision-Making in Business
Sustainability and Corporate Social Responsibility: Balancing Profits and Planetary Health
The Role of Business in Addressing Social Issues
Whistleblower Protection and the Ethical Obligations of Employees

Innovation and Entrepreneurship

The Role of Innovation in Driving Business Growth
The Entrepreneurial Mindset: Characteristics and Erfolgsfaktoren
Creating an Innovative Work Environment
The Impact of Technology on Business Innovation

Leadership and Management

Effective Leadership Styles: Authoritarian, Democratic, and Laissez-faire
Motivating Employees: Theories and Best Practices
The Importance of Diversity and Inclusion in Management
Managing Organizational Change: Challenges and....

Understanding Business Failure: A Comprehensive Analysis of Causes, Consequences, and Mitigation Strategies

Introduction

Business failure is an unfortunate reality that affects a significant number of enterprises worldwide. Understanding the causes, consequences, and potential mitigation strategies for business failure is crucial for entrepreneurs, managers, and policymakers alike. This thesis aims to provide a comprehensive analysis of business failure, exploring the factors that contribute to its occurrence, the impact it has on individuals, organizations, and the economy, and the measures that can be taken to mitigate its effects.

Section 1: Causes of Business Failure

1. Economic Factors: Economic downturns, recessions, and changes in market conditions can....