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Revenue refers to the money a company obtains from conducting its business. On the other hand, cash describes the ready money that is in hand, bank account or petty cash. Both cash and revenue are used as common variables for assessing the financial strength of business. However, revenue provides an indication of the company’s effectiveness in sales and marketing while cash tends to be an indicator of the effectiveness of money management strategies (Chew and Parkinson, 2013, 24). In accounting, revenue is commonly recorded at the time a transaction takes place and may not necessarily reflect the amount of cash available at hand or bank. Eventually, revenue impacts a company’s cash but does not always have an automatic effect on the amount of cash. In accounting, the concept of equality describes the relationship between variables (William, Shannon, and Maher, 2005, 39). The most important relationship is that between items in a balance sheet, where the equality principle states that the value of assets must be equal to the value of liabilities. Any deviation from the equality indicates possible errors in the accounting entries calculations. Week 4: Discussion Forum: 4.1 I do not agree with the statement that ratio analysis is limited concerning the amount of information it can reveal about a company’s financial performance. My reason for disagreeing is that financial ratios are a valuable tool that is widely used across industries to judge organizations’ performance regarding management and operations (Tracy, 2004, 61). These ratios judge how well an organization can utilize its resources and assets to generate income (revenue). Ratio analysis is also used to
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