How do income statements & balance sheets help management make sound decisions? What is the bottom line?

Please answer the following questions in detail:

How do the income statement and the balance sheet help management make sound decisions?

How can you find out, at any time, whether your firm can pay its bills as they become due?

If your firm's expenses equal or exceed its revenues, what actions might you or your managers take to change this situation?

In discussing the firm's latest financial statements, one of your managers says that it is the "results on the bottom line" that really count. What does the manager mean by this statement?

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...business decisions that can be dissected, analyzed and discussed as a result of closely viewing the financial statements.

How can you find out, at any time, whether your firm can pay its bills as they become due?

The best way to determine whether a company will be able to meet its current obligations is to perform two simple procedures. First, the working capital amount and ratio should be computed and compared to last year. Secondly, the company should prepare a cash flow budget going forward for 12 months. The ratio analysis will tell the reader whether current obligations can be met today and the cash flow budget will forecast the same for the next 12 months. In seasonal businesses particularly, the cash flow analysis will tell the reader when a bank loan will be necessary to make it through the lean months.

If your firm's expenses equal or exceed its ...