Financial Statements Are Indispensable Analytical Tools For Any Business Regardless Of Size
• Balance Sheet – will permit the viewer to determine the net worth of an organization via seeing: o Total assets, debt, and owner/stockholder’s equity
• Income Statement – one will ascertain the both current and past performance of a company via displaying: o Gross income o Adjusted gross income (gross income – cost of goods sold) o Operating income (direct and indirect) o Income before and after taxes
• Cash Flow Statement – is an important part of the life line of the company. This statement will exhibit the daily cash received and spent.
• Retained Earnings – Depicts the net income distributed to owner(s)/shareholders after taxes and withdrawals.
Furthermore, these statements afford the viewer to make intelligent decisions regarding future monetary objective(s), evaluating, feedback, and provide a path for forecasting, performance, control, along with planning (Garrison, Noreen, & Brewer, 2014).
Understanding the purpose, components, and how each statement stand alone and interrelate afford viewers both internal and external a clearer insight regarding any business in its entirety. When a viewer is reviewing an income statement he or she (gross and net…