MBA Organizing and Summarizing What a Firm Owns Discussion – Description
Response to peer
Hi Professor,
The balance sheet is a snapshot of the firm. It is a convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm’s equity) at a given point in time. Balance sheets from different time periods may be compared to see how assets, liabilities, and equity have changed. Financial managers may monitor the performance of the business, spot patterns, and gauge the success of financial initiatives thanks to this study.
From table 2.1, we can see US Corporation’s asset is growing on a faster speed than its liability, and its liability structure slightly changed.
The income statement measures performance over some period of time, usually a quarter or a year. Financial managers can monitor the company’s performance, spot changes in revenue sources, and assess the success of cost-cutting initiatives by comparing income statements from various time periods. Financial managers may make educated judgments about pricing, cost-cutting measures, product offers, and other company strategies with the use of the income statement. It offers insightful information on the costs and benefits of various alternatives.
From table 2.2, we can see US Corporation’s cost structure and revenue generation ability, so the financial management can use this to access the company’s profitability and efficiency.
Reference:
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of corporate finance (13th ed.). McGraw-Hill
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