Small Business Finance: Financial Ratio Analysis

At the end of this lecture, you will be able to:

1.Understand the differences and similarities that exist between a personal income statement and a business income statement.

2.Distinguish between fixed and variable expenses.

3.Distinguish between assets (uses of funds) and liabilities and equity (sources of funds).

4.Build a business balance sheet.

5.Build a business cash-flow statement.

6.Identify the elements of the cash flow cycle.

7.Explain how working capital policies are established and how they influence financial needs.