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Financial Statements and Cash Flow Management

December 14, 2022by Barbara Flynn0

I have been pursuing my bachelor’s degree in accounting.  I have taken several business and finance classes as part of my program.  In my most recent course, Principles in Finance, I have been tasked with picking a major corporation to study its finances.  Throughout the course, I have studied various company components and how they have chosen to do business.

Business Selection:

For my project, I have selected The Walt Disney Co. In 1923, the company began when Walt Disney came to California with a cartoon and a dream (Disney, 2022). Along with his brother, Roy, they formed the Walt Disney Studio. Through some ups and downs, the brothers eventually learned from their mistakes, became marketing moguls, and created one of the most internationally recognized brands in the world today.    Although the Disney brothers have passed away, the company they created thrives from the groundwork they began. A board of directors, led by a chief executive officer, was created to carry out the brother’s dreams. They decided to restructure the company from more than just creating movies, cartoons, merchandise, and theme parks, to adding cruise lines, social media networks, and streaming online (Disney, 2020). The board of directors has continued to diversify, acquiring FuboTV, Hulu, and ESPN+ in 2018 (Disney, 2020).

Financial Statement Role:

Financial statements are essential to a business because they provide an image of the company’s financial health. Financial statements allow one to determine where the money is going. First, we analyze financial statements to assess their financial condition from an investment standpoint (Titman et al., 2018). We also use financial states to assess employee performance and product price control. Second, we use the income statement to evaluate the company’s past performance and see what potential cash flow the company may have. Third, we use the balance sheet to look at the company’s assets, liabilities, and stockholders’ equity as of a particular date (Titman et al., 2018). Fourth, we use the cash flow statement to assess the cash spent and received over a specific period. Finally, we look at the Statement of shareholder equity and how our shareholder’s “equity does not appear in the income statement” (Titman et al., 2018).

Cash Flow Management:

Cash flow management is essential to a business and its financial health because it allows it to pay its bills on time, gain access to more funding when needed, and understand where and when to cut back or spend more. When business managers begin their cash flow management, they take a long hard look at the accounts receivable. If this number is positive, they will have the money to pay the company’s bills, such as payroll, loans, equipment, etc. If the number is negative, the business could find itself on a slippery slope, unable to pay bills essential to keeping itself afloat. According to the article Oil & Gas Long Player’s article Warner Bros. Discover: Poof Goes The Free Cash Flow – A Bear’s Paradise, Warner Bros., had a cash flow management issue until they decided to change strategies. As of Q3 of this year, their cash flow issues have begun to turn around (2022). The article illustrates the significant acquisition and settlement that Warner Bros. had acquired and discusses that due to the one-time payment of the acquisition, the cash flow that is currently “gone” will now flow again due to the value that the acquisition will supply. The author credits this directly to the company’s management planning strategies. Their strategies will eventually enable Warner Bros. to thrive as The Walt Disney Co. is doing.


Whether you need partial bookkeeping needs, all your bookkeeping needs, payroll, or even help to understand your financial statements, People First Inc. is here to help you.

Sally Houle


Disney. (2020). Disney History. Walt Disney Archives. https://d23.com/disney-history/

Disney. (2022). The Walt Disney Company. https://thewaldisneycompany.com/

Oil & Gas Long Player (2022, Nov 5). Warner Bros. Discover: Poof Goes The Free Cash Flow – A Bear’s Paradise. Seeking Alpha. https://seekingalpha.com/article/4553527-warner-bros-discovery-q3-earnings-free-cash-flow-disappear-bear-paradise

  1. Titman, A.J. Keown, J.D. Martin., (2018). Financial Management: Principles and Applications. Pearson.

Barbara Flynn

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