To operate a business one must have a keen sense of accountability of how the money flows throughout the business. A business also likes to see the big picture of the financial stability of the company. To obtain this type of information the businesses view its company financial statements. The four main important financial statements to help businesses seek this information are the statement of cash flow, the income statement, the retained and earning statement, and the balance sheet (U.S. Securities and Exchange Commission, 2007). In this paper the writer will discuss the four types of financial states and how these statements are most important to investors, creditors, and management.
Types of Financial Statements
The accomplishment of a business rely upon on the periodic achievements its finances. When a company evaluates its financial statements, they will get a better idea of the financial health of the business. By examining the balance sheet the company can view its assets and liabilities. The second statement is the income statement that shows the benefits and the debts of the business time frames. The income statement is often referred to as the profit and loss statement. Businesses get a clear picture of any monies made or lost from this report. The third statement is the retained and earning statement. This statement shows how the profits were allocated to the businesses and other owners of the company. These earnings are often put back into the company for future use. The fourth statement is the statement of cash flows. This statement recognizes the company’s operations and how the cash was attained and how it will be spent. This is the most important financial statement. It tells the company how much income came into the company and how much income went out of the company. The amount of money the company generated is also in this financial statement. These financial statements play an important part to both... [continues]
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