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Instructions of FIN 320 2-2 Journal: Financial Statements and Cash Flow Management
Overview
This journal is the first in a series of connected assignments culminating with Project Two. In Project Two, you’ll analyze and evaluate a business’s financial health. You’ll also recommend financing options that improve the company’s financial health. Use the Project Two Business Options List to choose the business that you’ll examine in Project Two. Then use Mergent Online to locate the most recent quarterly financial statements for the business: the balance sheet, the income statement, and the cash flow statement.
To succeed in your Project Two assignment, you will need to understand the role of financial statements and how they help a business determine its financial health. You will also need to explain why cash flow management is important to the financial health of a business.
Directions
Write a brief journal that introduces the business you chose for your Project Two assignment.
Specifically, you must address the following rubric criteria:
Business Selection: Describe the business you chose, including the business name and what the business offers consumers.
Financial Statements: Using Mergent Online, download and submit a copy of the balance sheet, the income statement, and the cash flow statement from the most recent fiscal quarter for the business you chose.
Financial Statement Role: Explain why financial statements are important to a business and how they help businesses determine their financial health.
Cash Flow Management: Explain why cash flow management is important to a business and its financial health. Use a financial news story from the past two months as an example to support your claims.
What to Submit
Your journal submission should be a 3- to 4-paragraph Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Any sources should be cited according to APA style. Also submit the Excel files for your chosen business’s balance sheet, income statement, and cash flow statement from Mergent Online.
Step-By-Step Guide of FIN 320 2-2 Journal: Financial Statements and Cash Flow Management
Introduction to FIN 320 2-2 Journal
This journal is the first in a series of connected assignments culminating with Project Two. In Project Two, you will analyze and evaluate a business’s financial health. You will also recommend financing options that improve the company’s financial health. I will provide brief and descriptive guidelines to solve the FIN 320 2-2 Journal: Financial Statements and Cash Flow Management and a dummy solution. This Owlisdom How-To Guide will equip you with guidelines to tackle all the queries related to the FIN 320 2-2 Journal. Let us begin with the guide.
Describe your chosen business, including the business name and what the business offers consumers.
Introduction to Johnson & Johnson
In this first section of the FIN 320 2-2 Journal: Financial Statements and Cash Flow Management, we will briefly introduce the business we chose for this Module 2 Project. I have selected Johnson & Johnson. You can use the Project Two Business Options List to choose a business that suits your tastes.
- Start with a brief introduction to Johnson & Johnson.
- Mention that it is a multinational corporation that provides a wide range of consumer health, pharmaceutical, and medical device products.
- Highlight its mission to improve access and affordability, create healthier communities, and put health within reach of everyone, everywhere.
Example
For my Module 2 Project, I chose Johnson & Johnson, a leading multinational corporation. It offers diverse products spanning consumer health, pharmaceuticals, and medical devices (Investor Relations | Johnson & Johnson, n.d.). With a mission to enhance access and affordability and foster healthier communities, Johnson & Johnson strives to make health achievable for all globally.
Using Mergent Online, download and submit a copy of the balance sheet, the income statement, and the cash flow statement from the most recent fiscal quarter for the business you chose.
Accessing Financial Statements
Next, for the FIN 320 2-2 Journal: Financial Statements and Cash Flow Management, we will look for the most recent quarterly financial statements of our chosen business. The instructions of FIN 320 2-2 Journal mention that we must access the financial statements from the Mergent Online of SNHU Portal. I cannot access Mergent Online, so I downloaded the financial statements from Jhonson & Jhonson’s official website. I will attach the required financial statements and the solution to the FIN 320 2-2 Journal.
- From the official Johnson & Johnson website, under the Investor Relations section, download financial statements for the recent quarter.
Explain why financial statements are essential to a business and how they help businesses determine their financial health.
Understanding the Role of Financial Statements
In this section of the FIN 320 2-2 Journal: Financial Statements and Cash Flow Management, we will discuss the importance of financial statements in the performance of the business.
- Explain that financial statements are crucial as they provide a snapshot of the company’s financial health.
- The balance sheet shows the company’s assets, liabilities, and equity, giving insight into its stability.
- The income statement reveals the company’s profitability over a period, and the cash flow statement shows how the company generates and uses its cash, highlighting its liquidity.
Example
Financial statements are indispensable for businesses, offering a comprehensive snapshot of their financial health (Kimmel et al., 2020). The balance sheet, detailing a company’s assets, liabilities, and equity, provides critical insights into its financial stability at any given moment. This allows for assessing how well-equipped a business is to meet its obligations and pursue growth opportunities. The income statement sheds light on profitability, illustrating the company’s revenue generation and expense management over time. Meanwhile, the cash flow statement clarifies how cash is generated and utilized, emphasizing the business’s liquidity (Fridson & Alvarez, 2022). Together, these documents are vital for informed decision-making and strategic financial planning.
Explain why cash flow management is essential to a business and its financial health. Use a financial news story from the past two months as an example to support your claims.
The Significance of Cash Flow Management
Next, in FIN 320 2-2 Journal: Financial Statements and Cash Flow Management, we will discuss why and how cash flow management is vital for a business’s financial health.
- Stress the importance of managing cash flow effectively, as it is vital for the operational viability of the business.
- Without proper cash flow management, even profitable companies can face difficulties.
- Use a recent financial news story related to Johnson & Johnson or a similar company to illustrate the impact of cash flow on business decisions and financial health.
- Mention how cash flow management helps sustain operations, fund investments, and ensure financial flexibility.
Example
Effective cash flow management is crucial for the operational viability of a business, ensuring it can meet its obligations, fund investments, and maintain financial flexibility (Wiatt et al., 2021). Even profitable companies can encounter problems without it. For instance, a recent story highlighted how Johnson & Johnson navigated through unexpected expenses by efficiently managing its cash flow, ensuring the company could sustain operations and continue strategic investments without compromising its financial health. This example underscores the importance of cash flow management in making informed business decisions. It demonstrates its role in maintaining stability and supporting growth in the face of financial challenges and opportunities.
Closing
This How-To Guide allows you to understand the critical role of analyzing financial statements and managing cash flow in assessing a business’s financial health. Following the guidelines, you can solve FIN 320 2-2 Journal: Financial Statements and Cash Flow Management Journal like a pro. Good luck!
Hey! You can also read our FIN 320 next module on 3-2 Project One: Financial Analyst Job Aid.
References
Fridson, M. S., & Alvarez, F. (2022). Financial Statement Analysis: A Practitioner’s Guide. John Wiley & Sons.
Investor Relations | Johnson & Johnson. (n.d.). Retrieved April 2, 2024, from https://www.investor.jnj.com/overview/default.aspx
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2020). Financial Accounting: Tools for Business Decision-making. John Wiley & Sons.
Wiatt, R. D., Lee, Y. G., Marshall, M. I., & Zuiker, V. S. (2021). The Effect of Cash Flow Problems and Resource Intermingling on Small Business Recovery and Resilience After a Natural Disaster. Journal of Family and Economic Issues, 42(1), 203–214. https://doi.org/10.1007/s10834-020-09710-y
