“The Cash Flow Statement And The Profit And Loss a

Discuss the controversy: The cash attend disputation and the pull in and loss tarradiddle measure quite different aspects of a companys performance and are based on different rules and concepts. (1377 words) In the financial disputation, cash flow statement and the value and loss account have different roles. some(prenominal) of them scum bag assess the financial performance of a company, that in different aspect. Anyway, they have their own strengths and weaknesses on this. This doesnt mean that they are contradictory or compete with from separately angiotensin converting enzyme other. In contrary, they are complementary. The strength of cash flow statement tummy relieve the weaknesses of the profits and loss account, and iniquity versa. Firstly, about the profit and loss account, it concentrates on the turnover, the toll of sales, and the profit. This is more suited for measuring the favourableness of a company. For example, dividing the net profit in a dvance interest and tax by sales, we can calculate the feed on sales (profit margin). With the help of counterbalance sheet, we can alike calculate the return on large(p) employed and the plus turnover. Through calculating the profitability proportionality of a company, we can assess the financial performance of a company easily, oddly for the large or international company.

save of calculating the profitability ratio, comparing with the cash flow statement, the profit and loss account is more relevance, which matches the revenues and the expenses within the comparable period. For example, we leave alone us e one of the depreciation methods to dividin! g the long-term fixed cost into different periods. This natural action can bring both relevant accounts in the same period of time. However, when we are matching the revenues or debts, estimation are inevitable. In the above example, when we severalize the long-term fixed cost, we whitethorn choose straight contrast depreciation method; decrease balance method or sum of digits method. Each of them is use different logic to aim the cost of each period. just about of these methods may...If you want to involve a full essay, order it on our website: BestEssayCheap.com

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