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In: Accounting

If you only had 4 numbers from the financial statements to evaluate the financial health of...

If you only had 4 numbers from the financial statements to evaluate the financial health of a company, which 4 numbers would you chose and why?

Solutions

Expert Solution

NET PROFIT

The first thing to evaluate in the financial statement is the net profit ,it tells you how much  money a company have earned after expense are paid out .The next step is to analyse the trend of profit that may be upward ,downward or flat ,after comparing the past financial reports.

CASH FLOWS

It is one of the key point in the financial statement of a company The cashflow figure shows all the data regarding  cash inflows and outflows of a company ,it can be operating cashflow ,investing cashflow and financing , cash flow statement is the some of these activities

ACCOUNT RECEIVABLE

It is the fancy way to say the money the company owed.Account receivables are listed in the current asset side of the balancesheet.AR is the the money owed by the customer for purchse made on credit

DEBTS

While evaluating a financial statement it is important to look at the debts of a company  Debt can be short term or long term , it shows how much leverage a company has and how solvent the company is

ekkarill92 answered 1 year ago
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