Financial Statement Analysis

750 Words 3 Pages
Financial Statements reflect the effects of business transactions and events. The different types of financial statements are not isolated from one another but are very closely related in many aspects. In the following diagram I prepared, it shows how they are very closely related to one another.

First off what are financial statements? Financial statements are formal reports of the financial positions that businesses are in. It mostly runs red or black. Most managers and business owners use these reports to monitor, their business and see how well they are competing with other businesses. Owning a business is very challenging, it is important for the company to be stable, organized, and for them to be making profit. To do this they use
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Communication is crucial in having a successful company. The company needs to be able to communicate on all levels from management to the customers. This evolves the owners, workers, and customers. This is crucial in order to maintain a successful business. With lack of communication in a firm, many things can go wrong. For a business to be successful, everyone must be on the same page.

There are many types of financial statements. Basic financial statements require a balance sheet, cash flow statement, and notes about the account. Balance sheets are the statements of all of the liabilities and assets that a business or company possesses. The balance sheet shows the income over a certain financial period.
Retained earnings are extremely important to companies as well. They are the percentage of earnings that are not paid out as dividends. The retained earnings are recorded onto the balance sheets under the shareholders equity. To maintain a successful company or business, the owners must pay attention to cash flow, income, balance sheets, and the retained earnings. These are not the only things that the owners of the business need to pay attention to, but they are the most crucial things that could make you thousands or lose you
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They are classified as internal and external users. The internal users are the management of the company, and the analysts who finalize the statements. External users on the other hand are not exactly people who even work for the company. The external users consist of the investors, government, owners, employees, general public, and of course the customers. Looking at two different types of users can create many different doors for the company because their are more opinions being taken in. The external users opinions are more important usually because they are the ones who are participating in the company, by supporting the company by buying the products or giving good reviews. They ultimately help make the company grow and

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