Growth and earnings per share Essay Example | Topics and Well Written Essays - 750 words

Growth and earnings per share - Essay Example This reporting effects business operations in a positive manner by changing their course according to the report. Income growth helps organizations realize their profitability and income generation, according to this the stakeholders are given their share of profit in the form of more stocks or cash. This effects the business operations in a positive manner as they are pointing towards a positive direction. The earning per share helps the company decide the price of their stock, as the company's earning per share increases it becomes more profitable. EPS also helps tell the stakeholders the position of the company in the market and the risk associated with it. This effects the business operations of the company and they try to organize their operations according to the plans and strategy that are being implemented by the company. All these three revenue growth, income growth and earning per share are the fundamentals of the business and their overall impact on the business operations is to aware the management of the necessary changes that are required. Net profit and cash flow are two separate things that help in analyzing the business progress and where a company is heading to. These two also determine whether the company is a success or a failure. The two components help the company in organizing itself and predicting the future. Net profit is basically all the revenue minus cost of goods sold which equals to gross profit then we minus the operating expenses from the gross profit we get the net profit. Net profit is then used to pay the dividends to stake holders and save amount for future investments. Cash Flow: Cash flow is basically all the cash that is flowing into the company and all the cash that is going out of the company. Cash flow only includes current assets and mainly is cash related. The cash flow does not include the assets and other profit related aspects of the Income Statement. The difference between the two components is that net income indicates the money that has been generated by the company but cash flow only indicates the money flowing out and coming into the company, though both of the components have an important use for the business but are different from each other. If a company runs out of available cash it has problems paying employees and running business operations. Another major difference between profit and cash flow is that when a product is sold and as it may have been sold on credit the profit is realized immediately but the cash flow is recorded when the cash is received. The 2005 article "Understanding your Balance Sheet" describes three categories of assets. What are they Give examples of what belongs in each category. The balance sheet is an instrument that helps government know how much a company owns and how they are positioned. A balance sheet has all the assets on one side and the liabilities and capital on the other side. Both sides balance each other. The assets column mainly consists of three types of assets. Current Assets Current asset refer to those holdings of the company that can be easily liquefied and exchanged for cash. For example cash