Week 1 DQ

Answer questions below min 150 word count for each question.

Cash flow is the source of value for any entity.  Why is this the case? 

How does information flow across the financial statements?  

How is cash flow different from net income?

Financial markets offer a plethora of options.  With the complexity of options, why would an entity decide to access public markets for funds? 

 What are the advantages and disadvantages of doing so?

Your text presents two types of financial analysis: common-sizing and financial ratio analysis.  What are the benefits of common-sizing (horizontal and vertical analysis)?

  What are the key categories of ratios? 

What "story" does each tell about the company's financial performance?  

What ratio(s) are most valuable for a company to consider?  Why?

What effect does depreciation have on an entity's earnings?

 Why is depreciation (as well as amortization) considered to be a non-cash expense?

 If you were analyzing an entity's earnings and their depreciation was increasing, what effect would you expect to find on the cash flow statement?  Why?