The three fold orientation of this airtical fits hand in glove with the three basic financial statements of every business: the profit report income statement,the financial condition report balance sheet,and the cash flow report statement of cash flows.
Business managers should never ignore the cash flow consequences of their decisions. Higher profit may mean lower cash flow; managers must clearly n derstandwhy, as well as the cash flow timing from their profit.
Externally reported financial statements are prepared according to generally accepted accounting principles GAAP. GAAP provide the bed rock rules for measuring profit. Business managers obviously needo know how muchprofit the business is earning.But, to carry out their decision-making and control functions,managers need more information than is reported in
the external profit report of the business.
GAAP are the pointof departure for preparing the more informative financial statements and other internal accounting reports needed bybusiness managers. The failing of GAAP is not that these accounting rules are wrong for measuring profit,nor are they wrong for presenting the financial condition of a business—not at all.
It’s just that GAAP do not deal with presenting financial information to managers. In fact, much of this management information is very confidential and would never be included in an external financial report open to public view.
Collect your free stuff like <a href=”http://www.5minutetrader.com”>stock recommendation</a> and <a href=”http://www.5minutetrader.com”>investment strategy</a> articles on<a href=”http://www.5minutetrader.com”>stock market</a> on http://www.5minutetrader.com/benefits.php.
