Financial Statements Paper Part I
Financial Statements Paper Part I
Stephanie Pomier
ACC/497
December 15, 2014
Prof. Carolyn Lundy
Financial Statements Paper Part I
The Consolidated Statement of Earnings tells that the company’s gross profit declined over $2,000, in the last two years. Their operating income declined, which is good because that means not much of the business’s money went to operating expenses. This statement is important because it shows the profitability of the company during the fiscal year. Business decisions that can be made with the income statement are if a company wants to add more employees or expand the company. With the income statement they are able to determine if there is enough money to do so.
The balance sheet tells that the company’s receivables have declined within a year, which means that customers are paying their invoices. The company’s short-term investments have declined, as well as their short-term debt. The balance sheet is important because it shows how fast or slow assets can be converted to capital, it shows the solvency of the company, it also shows the amount of capital retained in the company. A business decision that can be made using the balance sheet is if it would be wise to take out a business loan and for how long. The balance sheet can also help a company decide if it is best to liquidate any assets to pay off some business debts.
The statement of Cash Flows tells that the company’s proceeds from sales and maturities of investments declined tremendously, that means that not a lot of investments were traded. The company’s long-term liabilities increased within a year. Since net operating cash is high than net income that means the company has constant cash inflows, which makes them look good to creditors and investors. Business loans can be acquired and it is possible to have a decent rate because of their constant cash flow.
The information that is provided in the statements are the total current liabilities and assets, knowing this can
Stephanie Pomier
ACC/497
December 15, 2014
Prof. Carolyn Lundy
Financial Statements Paper Part I
The Consolidated Statement of Earnings tells that the company’s gross profit declined over $2,000, in the last two years. Their operating income declined, which is good because that means not much of the business’s money went to operating expenses. This statement is important because it shows the profitability of the company during the fiscal year. Business decisions that can be made with the income statement are if a company wants to add more employees or expand the company. With the income statement they are able to determine if there is enough money to do so.
The balance sheet tells that the company’s receivables have declined within a year, which means that customers are paying their invoices. The company’s short-term investments have declined, as well as their short-term debt. The balance sheet is important because it shows how fast or slow assets can be converted to capital, it shows the solvency of the company, it also shows the amount of capital retained in the company. A business decision that can be made using the balance sheet is if it would be wise to take out a business loan and for how long. The balance sheet can also help a company decide if it is best to liquidate any assets to pay off some business debts.
The statement of Cash Flows tells that the company’s proceeds from sales and maturities of investments declined tremendously, that means that not a lot of investments were traded. The company’s long-term liabilities increased within a year. Since net operating cash is high than net income that means the company has constant cash inflows, which makes them look good to creditors and investors. Business loans can be acquired and it is possible to have a decent rate because of their constant cash flow.
The information that is provided in the statements are the total current liabilities and assets, knowing this can
References: Importance of financial statements: the balance sheet. (2014). Retrieved from http://www.quickbooks.co.za/product/accounting-software/balance-sheet-importance/ Ori, J. (2014). What Business Decisions Could Be Made Using the Balance Sheet? Read more : http://www.ehow.com/info_8397837_business-made-using-balance-sheet.html. Retrieved from http://www.ehow.com/info_8397837_business-made-using-balance-sheet.html Cash Flow Statement. (2014). Retrieved from http://www.accountingcoach.com/cash-flow-statement/explanation