Week 10 Reading Reflection

1.   I was surprised about how the textbook laid out this chapter of financial statements. I myself am an accounting major about to apply to the master’s program here at UF, and I think the author did a very good job explaining the basics of accounting. He/she laid out in fluid language why the balance sheet balances. I think it is important for entrepreneurs to know some basic accounting to know where their finances are going, and I think this chapter laid it out in a basic, introductory language that could benefit every reader.

2.  I was confused about the “pro forma” statements that the author spends a paragraph talking about. I understand they just predict what the financial position of a firm should be in the future, but isn’t that an analysts job? I think its important to know where your firm is going in the future, but I don’t really understand why its necessary to create a new statement about that. I just wish the author went into more detail about the why’s of this statement instead of the whats.

3. I would ask the author if he/she thinks an entrepreneur should spend time learning accounting instead of just hiring an accountant right off the bat? I think accounting starts at the basics of a company, and it is important to know how to arrange your money and earnings into different statements and budgets for investors in the future

I would also ask the author in order of importance, what would you require the basic entrepreneur to understand with regards to financial ratios? Every new entrepreneur isn’t going to know all of the financial ratios and how they are operating and are useful. So what would he/she recommend as a baseline of the “must know” financial ratios?

     4. I disagree with the author on the statement “start up ventures have little recourse when their country’s currency begins to lose its value”. I understand the author’s point that when currency value begins to fall, tourism in that country increases, however, I don’t think entrepreneurs have little recourse. I just don’t think they see the long term implications of a deflating currency because they are trying to survive in a short term atmosphere. This downturn in currency can be very troublesome to new entrepreneurs.