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Explain the items found on the 3 financial statements

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Course is Corporate Finance

The CFO will soon want you to look at the financial statements of the firm and analyze a capital project submitted by the manufacturing division, which the company is considering. The financial statements the CFO wants you to look at are the income statement, balance sheet, and statement of cash flows. The capital project is for a new production machine that will produce more output and cut costs.

1) Explain the items found on the 3 financial statements, what they mean, and how they relate to each other.
2) income statement
3) balance sheet
4) statement of cash flows

5) Explain what the key components and metrics are of the capital project and what factors would influence the company to proceed with the project or reject the project.

Include references except from Wikipedia

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The expert explains the items found on the three financial statements.

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Please refer to the attached files for the response.

FINANCIAL STATEMENT ITEMS AND ANALYSIS IN BRIEF

BALANCE SHEET ITEMS

1. Total current Assets ($95,100)
This item shows the company's use of funds to either cash or near cash or to those that are easily converted into cash. They can be converted into cash within the accounting cycle. This item will indicate the company's liquidity or its ability to pay short - term obligations
2. Total Assets ($215,000)
This could show usage of company funds into assets in general- be it current or fixed. Considering that only 44.15% of total assets are composed of current assets, what is manifested is that the company invested more on long-term assets than short-term assets. This indicates that 55. 85% of the company's assets are long-term in nature indicating that the company is visionary or is focusing on long-term objective.
Total current assets/total assets: 0.44212
3. Accounts receivable ($8,600)
In relation to sales which amount to $367,500, accounts receivable is too small. This indicates that the company may have been discouraging credit sales or, the company is effective in managing accounts receivable.

4. Inventories ($60,000)
Inventories are the most illiquid among all current assets. Comparing it to current assets which is $95,100, inventories is too large (63.09%). This may indicate that the company's liquidity is at risk.
5. Total current liabilities ($51,000)
In relation to current assets, the company's currents assets are more than enough to pay its current liabilities (1.86:1).
Total current assets/total current liabilities: 1.864706
6. Total liabilities ($65,000)
Considering the current liabilities figures of $51,000, what is manifested is that most of the company's financial commitments are short-term in nature. This means that these have to be paid within the accounting cycle which is within one year. The company should be able to prepare for this.
7. Long-term liabilities ($14,000)
Long-term liabilities are not due within the accounting ...

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