Changes in Financial Position

If one inspects the balance sheet and the income statement, it is easy to see how much money passed through the company. How much profit was made? Did the working capital change and, if so, where did it go? (Working capital is the difference between the total current assets and the total current liabilities.) How were funds obtained from various sources like net profit, depreciation, and the sale of common stock used? How did cash generated affect the company operations? By careful tracking of changes through the changes in financial position, the reader can determine how the company managed its funds.

Excerpts from the 1999 Dow Company Annual Report [6] have been included as an example of a typical report from a chemical company (see Tables 3.10-3.12). It is useful to compare the entries in this report with those in the fictitious company Archem, Inc. (Tables 3.8 and 3.9). You will note that there are some differences in nomenclature and entries, but overall the income statement and the balance sheets are similar in style.

Table 3.10 Dow Consolidated Balance Sheet (1999 Annual Report. See Notes to Financial Statements.)a

December 31

Table 3.10 Dow Consolidated Balance Sheet (1999 Annual Report. See Notes to Financial Statements.)a

December 31

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