Week Four Discussion Questions
Why are companies required to
prepare a statement of cash flows? Why is the statement of cash flows divided
into three sections? What does each section tell you about a companyâ€™s operations?
What are some common ratios
used to analyze financial information? Which are the most important? What are
some examples of how ratios are used in the decision-making process?
Two popular methods of
financial statement analysis are horizontal analysis and vertical analysis.
What are the differences between these two methods?
What are the differences
between the direct and indirect presentation of cash flows? Why does the
Financial Accounting Standards Board allow both methods? Which do you prefer?
Why must preferred stock
dividends be subtracted from net income in computing earnings per share? Why is
common stock usually not issued at a price that is less than par value?
What three conditions must exist before a cash
dividend is paid? Contrast the effects of a cash dividend and a stock dividend
on a corporationâ€™s balance sheet.