FIN 320 2-2 Journal: Financial Statements and Cash Flow Management

Welcome to FIN 320 2-2 Journal: Financial Statements and Cash Flow Management

This journal is one of the related exercises leading up to Project Two. In Project Two, you will conduct a business financial analysis and evaluation of its financial position. You will also advise on sources of finance that help the company enhance its financial position. I will provide brief and descriptive guidelines to solve the FIN 320 2-2 Journal: Financial Statements and Cash Flow Management with a dummy solution. This Owlisdom How-To Guide will provide you with steps and tips to respond to all the questions concerning 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 discuss the business we selected for this Module 2 Project. I have chosen Johnson & Johnson. Looking at the Project Two Business Options List, you can pick a business type that suits you.

• Begin with a statement or two about what Johnson & Johnson is and what it does. 
• It operates globally and mainly offers consumer health products, pharmaceuticals, and medical devices. 
• It emphasizes its goal to expand prosperity and access, produce enduring constructive alterations in communities’ health status, and, ultimately, make health achievable for all people worldwide.

Example

Johnson & Johnson, a leading multinational Corporation, was selected for my Module 2 Project. It covers segments including the consumer, which touches on health, pharmaceuticals, and medical devices (Investor Relations | Johnson & Johnson, n.d.). Considering the primary goal of bettering access and affordability and improving the health of communities, Johnson & Johnson aims to make health possible for everyone worldwide.

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 seek the most recently filed quarterly financial statements of the business selected above. The FIN 320 2-2 Journal instructions state that we need to pull financial statements from Mergent Online through the SNHU Portal. Unfortunately, Mergent online is unavailable, so I downloaded Jhonson & Jhonson’s financial statements from its official website. In the same journal, I will ensure that I attach the necessary financial statements and the solution to the FIN 320 2-2 Journal.

• Go to the Johnson & Johnson website, navigate to the Investors page, and download balance sheets for the last 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, we will discuss the role of financial statements for businesses in the chapters Financial Statements and Cash Flow Management.

• The financial statements are relevant since they show the business’s financial position. 
• A balance sheet states a company’s total assets, liabilities, and shareholders’ equity and provides information about its stability. 
• The income statement portrays the company’s earnings during a given period, while the cash flow statement shows the generation of cash and its utilization in a given period, thus revealing liquidity. 

Example

Financial statements are considered necessary for any business since they summarize its financial position (Kimmel et al., 2020). A balance sheet showing a company’s liability, assets, and equity is essential in understanding the company’s financial position at a given period. It makes it possible to evaluate the readiness of the business to meet its responsibilities and expand its opportunities. The income statement gives a direction on the current level of profitability and usually compares the company’s ability to generate revenue from operations against its expenditure. On the other hand, the cash flow statement provides a clear picture of how cash is made and used, as well as the focus of the business in terms of liquidations (Fridson & Alvarez, 2022). Such documents are essential for important decisions and the company’s correct financial management.

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 explain why and how Cash Flow Management is essential to a business. 

• Emphasize the role of cash flows, especially understanding it as the decisive factor of business viability. 
• The lack of careful cash flow management can be problematic even for companies that reported a profit.
• Use a recent financial news piece related to Johnson & Johnson or, better yet, a similar company to explain the significance of cash flow for decision-making and the general well-being of a business. 
• Include how it assists in meeting or funding the needs of operating, investment, and other operations.

Example

Cash flow management plays a central role in the functioning of companies and organizations, thus meeting all internal and external commitments (Wiatt et al., 2021). Even profitable firms might face various issues if they fail to embrace this concept. For instance, a recent story that explored Johnson & Johnson noted how the company embarked on a cash flow management approach in order to avoid costs that seemed to arrive unexpectedly from left field; managing cash flow ensures that a company can take care of business and continue with strategic investments without necessarily putting the company’s financial health in harm’s way. This example sheds much light on the aspect of Cash flow management and its role in the success of business decisions. They prove their responsibility to keep steady and nurture development for communities coping with financial risks or gains.

Closing

With this How-To Guide, you can learn how analyzing financial statements and having a grip on cash flow is fundamental to judging a business’s health. Following the guidelines, you can easily solve FIN 320 2-2 Journal: Financial Statements and Cash Flow Management Journal. Good luck with 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