Balance sheet
The balance sheet is a financial statement that includes a list of the assets, obligations, and shares owned by the owners for a certain period of time. The declaration of revenue is a statement used to denote the financial success of a company over a given period of time. On the other hand, the cash flow statement reveals how changes in the balance sheet and financial statements have a bearing on monetary equivalents and condenses the research into running, funding, and spending in different operations. With regard to the three, they can be relevant in terms of various aspects. The balance sheet is not of vital importance on its own but might be relevant when paired with the income statement (Barton & Simko, 2002). The cash flow statement focuses on monetary movement than the rest (Nurnberg, 2006). The income statement could get a declaration as the document that provides the most crucial details. It’s because it reveals the ability of the business to generate profits. The information can assist in predicting the sustainability of the firm with future consideration (Penman, 2007).
Learning Activity 2
The preferred company to invest in would be Delta Airlines. It’s because the company projects a positive outlook for the year after the post-election optimism due to the picking of leisure and travel business packs and brightness of its stocks. That translates to an increase in earnings as a result of the positivity in the business environment. On top of that, the earning growth is projected to continue rising maintaining affirmative outlook without an experience of any major interference or shock. The thought gets supported by the confidence presented by the income statement. Also, the return on equity is expected to be high contributed by the stability in earnings which makes the company a suitable choice to invest if anyone is looking at reaping handsome returns in the long run (Butler, 1993).
References
Barton, J., & Simko, P. J. (2002). The balance sheet as an earnings management constraint. The accounting review, 77(s-1), 1-27.
Butler, R. (Ed.). (1993). Strategic investment decisions: Theory, practice, and process. Taylor & Francis.
Nurnberg, H. (2006). Cash Flow Statement. John Wiley & Sons, Ltd.
Penman, S. H., & Penman, S. H. (2007). Financial statement analysis and security valuation (p. 476). New York: McGraw-Hill.
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