Cash Flow Statement

In the business environment, the question often is not how much money the firm needs, but how effectively its using the cash it currently has. By delving into a cash-flow statement, corporate management can see activities that are costing the firm money and how to limit this financial bleeding. A statement of cash flows includes three specific sections that accountants report as follows: cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.

Income Statement

Corporate strategists agree that a business can grow and expand through various strategies, but three generally stand out as key to long-term growth. These include: market specialization, low-cost leadership and product differentiation. This trifecta enables organizations to grow sales and improve the bottom line, a key indicator in the income statement. Also known as a statement of profit and loss or statement of income, an income report includes revenues and expenses. Market specialization helps a company focus on a specific sector, whereas low-cost leadership enables the firm to sell products cheaper than competitors’ items. Product differentiation means increasing sales by convincing clients that the organizations products are superior to rivals.

Relevance

To produce lasting results, a business may combine the operational expertise of all personnel involved in the sales and marketing processes. This collaborative approach often extends beyond employees and covers manufacturing mechanisms and information technology systems. The goal here is to find the right operating mix to spur sales and curb losses, a key piece of information that an income statement provides.

Connection

References

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