1)swetha siga

Part 1

Cash is very important to any individual. When it comes to the organization it is essential. Because of the cash, only the organization will run. Cash helps the organization to purchase raw materials, stocks, and pay rents. Cash is termed as positive as well as negative cash. Positive cash is nothing but the cash with which the organization can hire more and more employees, buy the raw materials and products. Negative cash flow means indirectly the organization is not running according to the plan (Polyakova, 2019). Cash flow, profits, and losses are important terms in any organization. As per the general context, when the organization runs in profits then it can be said as the organization is successful. But the operation to be done, in order to run in profits is in the hands of cash flow itself. Based on the circumstances and situations in the organization, whether cash flow or profits are important can be considered. But it can be said, as the cash flow increases profit increases and losses decrease. If any business wants to run in profits then the cash flow is required for goods, materials (Yehuda, 2019).

Part 2

The analysis is to be done to know where the organization stands in the market. The analysis is important because it helps the organization to know whether it is improving or declining graphically. The balance, as well as income sheet, is often termed in the financial statements. The organization’s performance is evaluated in the financial statements. Through the analysis, the firm can easily understand the risks and profits they have gained. Moreover, accounting ratios can be evaluated which also consists of assets, leverage, and many more ratios. One of the important advantages of the performance analysis is that investors get an idea regarding where to invest. Additionally, they get a thought of, in which part they must be focussed so that company gains huge success. Periodically, the performance of the firm can be evaluated. By analyzing the financial performance of the firm, they can know about the profits or losses and can be careful next time. Moreover, they can know how the cash flow is generating and also the expenses of an organization as well. By analyzing, the areas where the firm must be improved can be known. If the analysis is done and the result obtained is bad then the investors will have another chance to overcome the loss. Strength and weakness can be calculated very easily if the financial analysis is done accurately. By evaluating the performance from time to time, the growth of the organization can be seen and, in most cases, can be developed by the evaluation sheet. The relation between the balance sheet, profit, and loss can be examined or analyzed by the financial analysis. Correct or appropriate decisions will be taken by either managers or stakeholders in the future by observing the analysis sheet. So financial analysis is very important in understanding the overall financial performance (Vogel, 2020).

References

Kolmakov, V., & Polyakova, A. (2019). Regional free cash flow dataset: An approach to regional performance evaluation. Data in brief, 25, 104175.

Penman, S. H., & Yehuda, N. (2019). A matter of principle: Accounting reports convey both cash-flow news and discount-rate news. Management Science, 65(12), 5584-5602.

Vogel, H. L. (2020). Entertainment industry economics: A guide for financial analysis. Cambridge University Press.

2)Sai Teja Thirukovalluru

Cash Flow and Financial Analysis
As Humans can’t survive without water and food the same way any business can’t survive without continuous cash flow. Generating cash is the primary goal of any business. In every business cash is required for various business operations like providing salary to employees, buying and investing in new facilities, and investing in R&D. If you want to check the growth and reputation of any organization cash is the primary parameter which is taken into consideration. Cash flow also signifies that how any organization pay their bills and expense on time (Tingbani, 2018). Cash flow during the life cycle of any business is important for the sustainability of any organization. For example, any organization provides and services based on specific terms and payments but if they don’t receive their payment on time company will able to conduct their smooth operation. If they receive their payment on time it helps organizations in the smooth conduct of their organization. If financial terms profit and loss of any organization are measured by deducting operating expenses from revenue in that financial year. Cash generation is not related to the profit and loss of an organization. Cash flow helps the organization in paying the payment on time to their supplier, vendor and other regulatory agencies (Medda, 2019).
Any organization releases the financial statement to share the credibility in the market. If you are a financial person then evaluating all four financial statements of an organization helps customers, shareholders, and investors in understanding their operation and performance. Financial statement analysis can be useful for evaluating future financial performance. If you want to analyse the financial condition of any organization, you have to compare various financial ratios. Each and every ration have their individual importance so evaluating multiple ratios at a time will give a clearer picture of any organization. The financial statement also helps any organization to compare themselves with their competitors. Investors also invest in those organization which has a sound financial condition which is measured by financial statement (He, 2020).
References:
Afrifa, G. A., & Tingbani, I. (2018). Working capital management, cash flow, and SMEs’ performance. International Journal of Banking, Accounting, and Finance, 9(1), 19-43.
Lo, Y. C., & Medda, F. (2019). Bitcoin mining: converting computing power into cash flow. Applied Economics Letters, 26(14), 1171-1176.
Zhang, H., Zhang, Y., Zhou, S., & He, Y. (2020). Corporate Cash Holdings and Financial Constraints—An Analysis Based on Data on China at Company Level after the Global Financial Crisis. Emerging Markets Finance and Trade, 56(7), 1490-1503.

3) Sri Harsha Naragoni

Cash flow statement is a very important tool and one of the three most important financial statements that any business utilizes to analyze cash flow. Cash flow is utilized by many investors to determine a company’s financial strength. Cash flow is crucial and considered the lifeline of any business venture (Haraldsen, 2020).

Analysis of cash flow statement will give information regarding whether your company is generating actual cash. It is important that you have cash in the bank to be able to cover expenses like payroll, purchasing raw materials, and renting the office space. Furthermore, cash flow is different from net income and profit analysis. The company I work for does take case flow analysis very seriously as we supply durable medical equipment to patients like wheelchairs, CPAP supplies, ventilator machines, and complex power wheelchairs. This equipment is first bought in bulk from a manufacturer and sold to the patients whom some have medical insurance, which covers these types of equipment, and some patients who buy them out of pocket. So the company has to look into cash flow and see if the company is making money at the end of the day as most equipment is bought by the company at a certain price and if not sold for profit then the business loses its cash inflow and ends up losing business as well (Tingbani, 2018).

Part 2:

Financial analysis is the assessment of the financial statements to determine the financial performance of a business. It assesses the liquidity, profitability, solvency, and stability of a firm. Financial analysis is used to compare and evaluate the business in terms of whether it is running profits or losses and if income expenditure is generating any income gains. For example, a ratio of net profit to sales is an indication of the percentage of net profit margin. Therefore, when this ratio is compared with the company’s standards, we can get an idea of whether the companies are performing well or not. And when we compare the net profit margin with the company’s previous year’s margins, we can analyze if the company is stable, improving, or running into losses (Mendelowitz, 2018).

References:

Afrifa, G. A., & Tingbani, I. (2018). Working capital management, cash flow and SMEs’ performance. International Journal of Banking, Accounting and Finance, 9(1), 19-43.

Brammertz, W., & Mendelowitz, A. I. (2018). From digital currencies to digital finance: the case for a smart financial contract standard. The Journal of Risk Finance.

Mork, K. A., Eap, H. M., & Haraldsen, M. E. (2020). Portfolio Choice for a Resource-Based Sovereign Wealth Fund: An Analysis of Cash Flows. International Journal of Financial Studies, 8(1), 14.