Business/FOR PROS. CHACHA ONLY

Imagine you own a business and you need to prepare a cash flow statement, and both a horizontal and vertical analysis. Please discuss the following information in your initial post:

•Briefly describe your business.

•What information will you need to prepare the cash flow statement?

•Which method will you use to prepare the cash flow statement? Why?

•How can a horizontal analysis help you evaluate the performance of your company? Vertical Analysis? Which analysis do you think is more important or relevant as a business owner?

Now imagine you are applying for a small business loan. You have all the financial statements prepared and the bank requests you to calculate three different ratios: working capital, acid test ratio, and current ratio.

•How do you calculate working capital, acid-test ratio, and current ratio?

•Why do you think banks or creditors look at these three particular ratios?

•Do you feel these ratios are important to monitor or do you feel other ratios are just as important?