Thank you to the approximately 100 individuals who participated in my financial literacy survey. The answers to the survey can be found on this link below. The graphical depiction of the results will be utilized in a future publication.
This survey illustrated in a concrete fashion that some members of the HR community would benefit from training in financial literacy concepts including Financial Statements.
Thank you for your participation.
Dr. Regan Garey
www.acctliteracy.com
The primary goal of the Statement of Cash Flows is to:
See how much net income has been spent
x See the many components of what makes cash increase and decrease
See how much cash is available at the beginning of the year
See how much only operating changes impact cash
The Components of the Balance Sheet are:
revenue and expenses
assets, liabilities and revenue
X assets, liabilities and owners’ equity
cash from operating and financing activities
List the components of the following Financial Statements:
Income Statement
Revenue – Expenses = Net Income
Statement of Owners’ Equity
Beginning Capital + Net Income – Withdrawals
Balance Sheet
Assets = Liabilities + Capital
Statement of Cash Flows
Operating, Financing and Investing
Accrual accounting is (more than one answer may apply):
Too complex
x More relevant than cash basis
x Records transactions regardless of when cash changes hands
Financial Ratios express the relationship between two numbers and if you are able to calculate and interpret some ratios from each of the four classifications of ratios, the job of analyzing the financial statements can be accomplished more thoroughly. Please note which ratios you are familiar with:
Liquidity ratios including the current raio, quick ratio
Profitability ratios including operating margin and return on total assets
Asset Management ratios including total asset turnover and age of facility ratio
Debt management ratios including LT debt to net assets and times interest earned ratio
None of the above
The Statement of Cash Flows is critical in understanding which of the following area(s):
Changes in cash flow from operations such as accounts receivable and accounts payable
Changes in cash flow from investing such as equipment
The many increases and decreases in different accounts which explain the change in ending cash from last year to this year
X All of the above
Unsure
Debt financing is critical because: (there may be one or more than one correct answer)
Interest expense is not part of EBIT
X Interest expense is not tax deductible
X Interest expense is tax deductible
x More debt means higher leverage which can decrease the organization's ability to obtain more credit
