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Guillermo Analysis

700 words - 3 pages

Guillermo's Furniture Store
University of Phoenix
Corporate Finance
FIN 571

Guillermo's Furniture Store
Guillermo’s Furniture Store produced handmade furniture in an area of Mexico in which the raw materials for the furniture was plentiful and the labor to produce the furniture was low. In the beginning, the area in which Guillermo manufactured the handmade furniture was still underdeveloped and allowed Guillermo to make a considerable profit selling the furniture. Year’s later, new business trends arrived in the area of Guillermo’s manufacturing plant that changed the way Guillermo needed to business as Guillermo’s profits began to decline. In an effort to remain in ...view middle of the document...

Before a financial decision could be made, Guillermo would have to review the store’s financial statements to know the kinds of decisions that can be made to remain in business. The financial statements consist of balance sheets, income statements, and cash flow statements. A company’s financial statements when used effectively, allow companies, investors, and even competitors to make financial decisions.
Balance sheets are a useful tool when making financial decisions about a company. “A balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity.” (“Beginner’s guide to financial statements“, 2007, para. 6) A company’s assets are the items a company owns. A company’s liabilities are the money a company has as debt. The shareholders equity is considered the difference from a company’s assets and liabilities.
Income statements give a visual statement of the amount of money a company has made or lost within a certain time. Income statements will show the money made through direct sales and the amount of money spent on items to build the products for sale. The...

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