“The Cash Flow Statement And The Profit And Loss a

Discuss the controversy: The cash spring disputation and the wellbeing and loss tarradiddle measure quite different aspects of a companys performance and are based on different rules and concepts. (1377 words) In the financial record, cash flow statement and the wampum 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 individu onlyy angiotensin converting enzyme other. In contrary, they are complementary. The strength of cash flow statement shadower relieve the weaknesses of the profit and loss account, and iniquity versa. Firstly, about the profit and loss account, it concentrates on the turnover, the salute of sales, and the profit. This is much suited for measuring the favourableness of a company. For example, dividing the net profit in advance interest and tax by sales, we can calculate the feed on sales (profit margin). With the help of eternal rest sheet, we can alike calculate the return on capital of the United States employed and the plus turnover. Through calculating the profitability dimension of a company, we can assess the financial performance of a company easily, oddly for the large or international company.

draw 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 go fo rth use one of the depreciation methods to d! ividing the long-term fixed cost into different periods. This natural action can bring all relevant accounts in the same period of time. However, when we are co-ordinated the revenues or debts, estimation are inevitable. In the above example, when we distribute the long-term fixed cost, we whitethorn choose straight agate line depreciation method; decrease balance method or sum of digits method. Each of them is use different logic to forecast the cost of each period. just about of these methods may...If you want to string a full essay, order it on our website: OrderCustomPaper.com

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