Chain Management and Franchising

In: Business and Management

Submitted By portia1998
Words 1281
Pages 6
Assignment 4: The Hair Emporium

Chain Management and Franchising

Decide on the types of accounting and financial records that Rolando and Rosa should and should not share with their franchisees. Provide a rationale with your response.
The operating profit is the profit that a company makes from its primary business activity. The firm's balance sheet reflects the operating profit. Because firms can make a profit from a variety of sources, including investments, understanding how much operating profit the primary business makes gives an accurate picture of the company's success at delivering its particular product or service. Can determine the operating profit by looking at the difference between the operating revenue, or how much money the company makes from its main business activity, and its operating costs. The cash flow statement shows where a company receives its cash, and how it spends it. Understand that the cash flow of a company changes rapidly as the business ebbs and flows, and the cash flow statement reflects the change from one statement to another. Revenue the company receives from customers, revenue from investment sales and money that comes into the business from loans are all sources of cash inflow reflected on the cash flow statement. Outflows of cash can include cost of goods sold, depreciation, purchases of machinery or buildings and loan payments. An owner's equity statement gives a picture of the changes that occur in an investor's ownership of the company, and how much equity the owner has for each reporting period. Owner's equity increases when the net income of the company increases, or when the owner puts in additional cash or assets into the business. The owner's equity decreases if the company has a loss, or if the owner takes money from the business through a withdrawal. Understanding how the owner's equity in a business…...

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