Company Performance : Business Or Firm For The Manager, Owners, And Lenders

1146 Words Dec 9th, 2015 5 Pages
Firms Performance
I any business or firm the manager, owners, and lenders need to keep track of the firms performance and review the financial statements, income statement, balance sheet, and statement of cash flows to determine if operations are operating correctly. In this paper I will discuss the purpose of the income statement by identifying the main areas covered, the balance sheet crucial assets, claims of creditors and owners shown, and the three accounts that comprise the owners’ equity on the corporate balance sheet. I will also define the statement of cash flow and the three standard sections, and lastly the three categories of ratios business can utilize in analyzing their finical statement and the benefits of calculation these ratios.
The Income statement is a report of the revenue that are generated and expenses that are incurred by a business or firm during a specific accounting timeframe, this can be generated quarterly or yearly (Melicher & Norton, 2014). The major expenses that are depicted on an income statement are gross profit, operating income, income before taxes, and net income, the gross profit takes into account the revenue or sales generated, and cost of goods sold in the businesses operations. Usually the gross revenue projects a larger amount then net revenue due to sales and allowances that accrue during the timeframe (Melicher & Norton, 2014). Cost of goods sold tally the cost of production or manufacturing products sold, creating revenue…

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