I Choose Life financial condition is constant and clear: its financial statements and the larger part of current budget may prove that joining to this team will lead to success and satisfaction. If a person wants to help this organization become financially more stable, no doubts should prevent against this activity.
Balance sheet. This sheet evaluates the organizations possible assets, liabilities, and stockholders’ equity as of a specific date. Bushman (2007) admits that assets and liabilities are normally into short term and long-term divisions including cash accounts, this is why assets have to become equal to liabilities and owners equity one day. The balance sheet of I Choose Life concentrates on the organization’s assets and liabilities, investments and stockholders’ equities, and property and equipment. More information and concrete numbers may be found at the end of the paper (Appendix). Land is considered as an asset, however unlike other fixed assets it does not depreciate because it doesn’t wear out (International Accounting Standards Board, 2007). Costs on land and its equipment are about $10 000 per year; this sum is not huge, and those, who want to become a member of this organization, should make use of this ability to invest.
Stock holders equity. The term stockholders equity connotes the difference between the reported quantity of assets and the reported quantity of liabilities. The reported quantity of stockholders’ equity will be dissimilar from the current or market value of the economy (Accountingcoach.com, 2009), like it is shown in the Appendix.
Income statement. This financial statement shows the revenue expenses and profit of a company for the past financial period. It can be used to figure out the cash flow, profit margins, and other financial metrics for the organization. The revenue section tells the amount of money an organization took in for a specified period. Some organizations will break down revenues according to the business sector or geographic region; and in some organizations, like the company under discussion, the retailers and manufactures use the term sales instead of revenue but still it is the same idea (Accountingcoach.com, 2009): Net Income= Revenue-Expenses. Revenue is the inflow that gets into the company through the sales of the products or leasing of company’s equipments or services. Expenses are regarded as outflows that are incurred in production of revenues. Income can be calculated as follows: Net Income= Revenue+ Gains – Losses. Gains of the organization are favors that are influenced by natural issues like increased sales and prices hikes during holiday like capital gains, and losses are the effects that causes the organization have lower income that expenses (Thomas, 2001).
Statement of cash flows. It gives information on alterations in cash and cash equivalents at some stage according to three activities: operating, investing, and financing. Significant non-cash transactions are also disclosed. It is useful in evaluating a company’s ability to pay the bills. It may contain information relating to the sources of cash, uses of cash and change in cash balance. Cash flow statement includes the analysis of all business transactions including the source of income and the ideas of how the cash was spent. Information to construct the cash flow statement is solicited from the balance sheets of that period and the income statement for that period (Investopedia, 2009).
Financial ratios. This component of financial analysis involves the working capital that is gotten from the difference between current assets and current liabilities. In the case of the balance sheet from I Choose Life the financial ratio will be:
Working capital = current asset –current liabilities: $89,000-$61,000 = $28,000
References
Accountingcoach.com. (2009). Explanation of Financial Ratios. Web.
Bushman, M. (2007). Using Ratio Analysis to Assess Financial Stability. Web.
International Accounting Standards Board. (2007). The Framework for the Preparation and Presentation of Financial Statements. London. Routledge.
Investopedia. (2009). Reading the Balance Sheet. Web.
Thomas R. (2001). Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports. Chicago: University of Chicago press.