Are Corporations the only entities that benefit from financial statements or individuals can also assess their financial health with these statements? This is the question that this article addresses. The article also goes on to explain the key concepts such as inflow, outflow, net flow, assets, liabilities, and net worth. Just like stakeholders in a company like to see a positive net worth and a positive net flow, individuals are also encouraged to do the same.
Critical Thinking Questions
- “I roughly know where I stand financially, so I do not have a need for personal financial statements”. What are your thoughts on this attitude after reading this article?
- If you are a student who is possibly still living at home, what are currently some of your inflows and outflows?
- For most students enrolled in a personal finance course, college loans would be the largest amount of liability. How do you feel about this liability? Is it possible you consider it an investment rather than a liability? Explain.
- The article suggests that your net cash flow can increase your net worth. How?