An organization’s finances are closely linked to local and global markets. Therefore, regular monitoring of economic factors, such as employment, inflation, supply and demand, and interest rates is sure to provide beneficial information. Therefore, it is important to understand the impact of economic factors upon an organization’s current and future operations and finances.
- Using the module readings, online library resources, and the Internet, research two to three articles on the importance of analyzing economic factors for organizations.
Then respond to the following:
- Why should companies pay attention to economic factors when managing the organization’s current and future financial information?
- Consider an organization you are familiar with. Identify the economic factor that has had the most impact on the organization’s earnings in the past 5 years.
- How has this factor impacted the organization and how has the organization dealt with the impact in a positive or negative manner?
- Please put the following income statement and balance sheet terms in the proper order:
Taxes, interest, gross profit, selling, general and administrative expenses, sales, depreciation, net income, cost of goods sold, and EBITDA.
- For the balance sheet, please categorize the following as short-term assets, long-term assets, short-term liabilities, long-term liabilities, or owner’s equity:
Cash, accounts payable, accruals, property, plant and equipment, inventory, accounts receivables, paid in capital, retained earnings, notes payable, mortgage, and accounts payable.
- Please explain in which order the four major financial statements need to be prepared, and why.
- Please also explain the three major categories of the statement of cash flows and under which category the following items belong. Also explain whether or not each item would be considered a source or use of cash for the period in question:
Inventory-increased for period
Net income-increased for period
Accounts receivables increase for period
Accounts payable decrease for period
Accruals decrease for period
Depreciation-increases for period
Bonds paid off
Inventories increase for period
Notes payable increase for period
Bonds redeemed for period