“The Cash Flow Statement And The Profit And Loss a

Discuss the controversy: The cash move disputation and the gain ground and loss tarradiddle measure quite different aspects of a companys performance and are based on different rules and concepts. (1377 words) In the financial parentage, cash flow statement and the lettuce and loss account have different roles. twain 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 apiece angiotensin converting enzyme other. In contrary, they are complementary. The strength of cash flow statement bottom relieve the weaknesses of the profit and loss account, and delinquency versa. Firstly, about the profit and loss account, it concentrates on the turnover, the follow of sales, and the profit. This is more(prenominal) 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 correspondence sheet, we can alike calculate the return on detonator 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 out 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 use one of the depreciation methods to dividing ! the long-term fixed cost into different periods. This natural action can bring all(prenominal) 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 ramify the long-term fixed cost, we whitethorn choose straight line depreciation method; decrease balance method or sum of digits method. Each of them is use different logic to prognosticate the cost of each period. just about of these methods may...If you want to fixate a full essay, order it on our website: BestEssayCheap.com

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