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Why are you interested in cash flows rather than accounting profits in determining the value of an asset?
Wiki User
∙ 11y ago
because that is what is being used
Wiki User
∙ 11y ago
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What is the importance of costs and revenue and profit for a business organisation?
To start with, you spelled organization wrong in your question, and if you're a finance or accounting student you may want to rethink your career path. In answer to your question, all you need to do is look at an income statement and put the pieces together. The top line is revenue (sales price multiplied by number units sold, in a rather simplified "accounting" version of the equation). Costs are the funds used to make the goods that are sold. The major importance of these two numbers are that they are part of your marginal profit (a crucial part of cost accounting that you will no doubt get to later). If your margins suck (sales-costs, again extremely simplified and missing innumerable possible factors) your profits will also suffer. This is very bad for an organization, as any publicly traded firm knows by experience. Low profits = mad investors due to mismanagement of their funds, who in turn sell your shares (if they are able to, due to market reaction to poor profits) and you stock price will tank. I hope this helps answer your question
Why would a company issue stock rather than debt to finance its operations?
This is not applicable to all cases.If a company is operating under uncertain markets where profits u get is not stable it is better to go for stock issues which gives u an option to return bk the money to shareholders when company have good profits but at the same time if u have debt financing irrespective of the market conditions u have to pay interest expenses which may pose u big trouble in bad conditions.Hence companies to be on safe side goes for equity rather than debt
What is the definition of a ponzi scheme?
The definition of a ponzi scheme is that ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from profits earned by the individual or organization running the operation.
Why does capital budgeting rely on analysis of cash flows rather that on net income?
Accounting assigns the cost of an asset to those periods during which the asset provides economic benefit to the firm. However, to analyze a capital investment proposal, we often have to be able to translate the accounting profit figures into actual cash flows, in order that we can apply "time value of money" techniques to the timing of these cash flows.
Why are customers interested in the success of the business?
If a customer places an order with a business, the customer would rather that business was so successful that they would not go into administration, but produce and deliver the products the customer had originally ordered.
Cash flows more important than profits?
1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
Cash flow rather than accounting profits in determining the value of assets?
You will want to use cash flows because that is what's being used. It shows you what's going in and out
What kind of organizations and businesses can you work for?
Any you like. Choose something that you are interested in rather than just aiming for profits!
What fund accounting?
Fund accounting is the accounting system emphasizing on accountability rather than profitability
Why is accounting described as a service activity?
Accounting services is mostly provided by certified accountants. Many organizations stay busy in generation profits and have no time to concentrate on their company's finances. For such situation, accounting companies in Dubai such as Flyingcolourtax come forward to give a helping hand by offering outsourced accounting services in Dubai. If you're looking for any kind of expert accounting services then contact Flyingcolourtax by visiting the link mentioned below: " www . flyingcolourtax . com "
What is the definition of manual accounting?
manual accounting means making records of transactions in record books rather than computers.
Signs of men who likes a women?
A man will initially hold eye contact with a woman - rather, seek eye contact. If the woman reacts in the same way, however fleetingly, she likely is interested in determining if there is potential for further communication. Or just sport!
Is a change from the cash basis to the accrual basis a change in accounting principle?
Yes it is a change in accounting principle. And a rather drastic change. Accrual Basis of accounting is the most fundamental accounting assumption which is regarded throughout the world. Thus if a person either departs or adopts the accrual basis its a change in accounting principle.
If you are only accounting student working in accounting do you call it accountant?
First of all, with language skills like these, you need not be in the accounting profession. An accountant is one who practices accounting as his/her profession. Therefore, I would argue that students involved in higher level accounting education are still considered to be students, rather than accountants.
What is a non-cash item accounting?
A non-cash item accounting refers to an entry on the cash flow that correlates to the expenses. These expenses are usually essentially just accounting entries rather than the actual movements of cash.
Explain the difference between financial accounting and management accounting?
Management accounting is a tool that managers use to perform day-to-day operations in an organization. This type of accounting usually does not provide exact numbers, but rather estimate and forecast. Financial accounting is a tool used to present the financial status of the organization to its external stakeholders. This type of accounting provides accurate numbers.
Explain the differences between financial accounting and Management Accounting?
Management accounting is a tool that managers use to perform day-to-day operations in an organization. This type of accounting usually does not provide exact numbers, but rather estimate and forecast. Financial accounting is a tool used to present the financial status of the organization to its external stakeholders. This type of accounting provides accurate numbers.
