Problem:
Your parents have been left a substantial amount of money and want to invest in a company. Your father trustss you to make a recommendation, but also wants to see the reasoning behind your choice. Prepare a combined income and cash flow statement for a public company that trades on either NYSE or NASDAQ. Download the company's annual report from its website. Confirm that the firm's income, dividends, and other capital transactions explain the change in equity for the most recent year, confirm that the firm's cash flow statement begins with the same net income amounts found in the income statement, and confirm that the firm's cash flow statement shows a change in cash that is equal to the difference between cash flow shown on the balance sheet at the beginning and end of the year.
In Excel, construct a combined income statement and cash flow statement. What would you do if you found there was a huge difference in the net income amounts and the reported cash flow amounts? How could technology limit the likelihood of this happening again.