Question

REVIEW QUESTIONS 1. What is the importance of developing and maintaining financial records in a franchised business? 2. What is the importance and use of a balance sheet? What are its primary components? be importance and use of an icme statment. What are its prinagy o 4. Explain the cash fow statement. What are the types of "lows" in such a statement? 5. What are the major ways a franchised business can increase the cash position of the firm? 6. Identify and describe the five major types of financial ratios.

Answer 1

1) a franchising arrangement where the franchisor provides the franchisee woth established business , including name and trademark , for the franchisee to run independently . so the franchisee up lots of in order to maintain same quality level as of the main company . they has to maintain the record so that franchisor can put a check while collecting fees and payments from franchisee . since startimg it up take higj entry and the franchisor intially put a check on franchisee and they have to show record of their business made , whether they are earning profits because this only shows the overall performance of the company .

2) balace sheet is an important tool for the investors to gain insight into a company and its operation. it is actually a summary of a single point time of company's Accounts covers all its assets , liabilities amd shareholder's equity.

components of balance sheet includes

1) assets ( tangible and intangible goods)

2) liabilities ( all creditors and outstanding amount long and short term liabilities )

3) owner's equity ( common stock , preferred stock etc.)

3) income statements important because its shows the financial performance of firm over a specific time period . it shows how business firm incurs ots revenue and expenses both in operating and non operating activities.

use of income statement

it is to provide the financial earning performance of entity over specific period of time . is allows disceting the revenue, expenses, operating income and profits of an entity .

components of income statement

1)net sales ( revenues)

2) cost of goods sold

3) other operating revenues

4) other income or expense.

4) cash flow statement is basically a financial statements which summarises the amount of cash and cash equivalents entering and leaving a company . it shows a how well a comapany is managing its cash position , how a company pay its debt obligations and fund ots operating expenses . it actually complements balance sheet and income statement l.

there are three types cash flow activities  

1) operating activities  

2)investing activities  

3) financial activities