Page 425 - Business Principles and Management

Unit 5

the company’s return on investment is below average for its industry, then man-
agers know that they may have to increase profits to attract new investors. If
the company’s current ratio keeps decreasing each period, then its liabilities are
growing faster than its assets. This indicates that the company may be getting
into debt trouble.

CHECKPOINT
Why should managers monitor a business’s working capital and
cash flow?

Sources of Financial Information

If a business needs general advice or special help with a financial problem, it hires
an expert. Types of experts available to businesses are accountants, bankers, con-
sultants, and the federal government.

ACCOUNTANTS

Accountants establish systems for collecting, sorting, and summarizing all types
of financial data. They prepare and explain in detail the many figures found on
financial statements. Accountants also help managers interpret financial data and
make suggestions for handling various financial aspects of a business. Large firms
have full-time accountants, whereas small firms usually hire accountants on a
part-time basis. A firm may hire a certified public accountant, or CPA, a person
who has met a state’s education, experience, and examination requirements in
accounting. Corporations that sell stock to the public must hire CPAs to approve
their yearly financial records.

BANKERS
Bankers also assist businesses with financial deci-
sions. Bankers are well informed about the finan-
cial condition of businesses, and they also provide
advice on how and where to get loans. Because
The Small Business Administration Web site is bankers frequently work with businesses, they are
an excellent resource for business information aware of businesses’ problems and needs. In the
with an online “classroom” that provides en- opening story, Clark knew he would need to ask
trepreneurial training. Point your browser to his banker for help and advice to maintain his loan
www.thomsonedu.com/school/bpmxtra. Identify with the bank.
training opportunities and material for new busi-
ness owners wanting to improve their financial CONSULTANTS
management skills. Find examples of financial
A consultant is an expert whom companies hire to
statements. What other assistance is available
help them solve problems within a specific area of
online to help business owners prepare financial
expertise. Consultants are not employees. They are
statements? Where is the nearest SBA office?
outside experts with specialized knowledge.
What resources are provided?
A financial consultant is valuable to people think-
ing about starting a business and to managers facing
www.thomsonedu.com/school/bpmxtra
challenges in existing businesses. Professors of
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