Financial Statement Analysis
In this unit you learned about the preparation and content of financial statements. A common phrase in finance is “cash is king!” With this in mind, the Statement of Cash Flows has been heralded as the most important financial statement.
The Statement of Cash Flows on page 2.1.6 presents how changes in Balance Sheet accounts will affect a company’s cash balance. Refer to that information and discuss how an increase in your company’s accounts payable from one period to the next is a means to maintain high cash balances in your company’s bank account. Do you believe there are any ethical considerations in slowing payments to your suppliers for the sake of increasing your company’s bank balances?