Earnings and cash flow analysis

Financial statement present financial state of affairs of a firm on numerical terms. They are analyzed and used for appraisal of financial performance of a firm. Earnings and cash flow analysis deals with two basic financial statements, namely, balance sheet, and income statement, along with the use of balance sheet and income statement data for managerial decisions. Besides, the Earnings and cash flow analysis also discuss the significance of free cash flow for a firm Earnings and cash flow analysis discusses in depth various types of financial ratios that are used for analyzing financial strengths and weaknesses of a firm.

Introduction to financial statements
The shareholder wealth maximization is the basic goal of a corporate firm. Therefore, it is the duty of corporate managers to report shareholder about financial affairs their wealth. A corporation prepares various types of reports for the purpose of reporting to shareholder. The 'annual report' is the basic annual document issued publicly by corporation. The chairman of the board of directors issues annual report in annual general assembly addressing the shareholder on behalf of the corporation.
The annual report of a corporation basically includes two types of information.

• First section presents the report of firm's operation during past year in verbal language. it also presents new developments, if any, the corporation is going to pursue.
• Second section of annual report represents four financial statements the balance sheet, the income statement, the statement of retained earnings, and the statement of cash flows cash flows.

Read more

The financial Statements contain the basic information expenses assets, liabilities, about revenues and cash flows during a specified period. the basic financial statements of a firm are the income statement of the balance sheet, which are prepared in accordance with generally accepted accounting principles (GAAP). The income statement keeps the record of revenues and expenses of a firm during an accounting year. The balance sheet shows a picture of a firm's assets, liabilities, and owners claim at a specific in time. Read more