LOAN

STRUCTURING
Instructor gocha khudoian
Student david chikhladze
Homework

N4,7
Man goal of every business is to make profit. It means to take
more money than you invest. . Generally to make a profit is
required to sell product or service above your cost of producing
these product. Using accounting at business is very important
because accounting is language of business accounting identify
analysis and summarize any financial transactions of the
company. Company preparing financial statements to show what
is happened at company.
Cash flow is most important financial statement for the small
company because it shows any cash inflow and cash outflow
movement of companys cash at three activities operating,
investing and financing.
Small business rather than large corporations has many
constraints such as drawback to issue stock. Because small
company always has large risk to default and their stock is not
valuable. Small companies have drawback to transfer easily
capital . And based on this cash flow from operations is most
important and integral part of small company because if this
company has negative cash flow from operations probability to
being bankruptcy is very high. Take a loan or issuing stock to
finance is very difficult process for small low volume company.
Operating cash flow shows cash condition form operations selling
goods or services purchases inventory and main source to
finance small companies inventory or fixed assets .
At small business is probably case that company having positive
net income which also shows operating performance and cash
flow from operations was negative and these very possible case .
because comapyes accounting are base main two assumptions
accrual based instead of cash based which means that you must

recognize revenue point of sale rather than receive cash and

matching principle, which means that when we show net income
at income statement it not means that we collect profit of these
amount and cash flow form operations shows cash movement and
is essential factor for small company to managing successfully
their assets and make right decisions.