research paper

Topics: Financial statements, Investment, Financial services Pages: 3 (858 words) Published: December 4, 2013
A. Summary report that shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders, and what is its current financial position. The three basic financial statements are the (1) balance sheet, which shows firm's assets, liabilities, and net worth on a stated date; (2) income statement (also called profit & loss account), which shows how the net income of the firm is arrived at over a stated period, and (3) cash flow statement, which shows the inflows and outflows of cash caused by the firm's activities during a stated period. Also called business financials

B. financial statements provide vital information about its financial health of the company. These statements are compiled based on day-to-day bookkeeping that tracks funds flowing in and out of the business. The information the statements provide offers benchmarks and feedback that help the company make minor adjustments and also determine its overall direction. Financial statements are useful for making decisions regarding expansion and financing. They also figure into marketing decisions, providing data indicating which aspects of company operations provide the best return on investment.

C. The users of financial statements use financial statements for a large variety of business purposes and their ability to understand and analyze financial statements helps them to succeed in the business world.  There are different kinds of users of financial statements. The users of financial statements may be inside or outside the business.  Financial statement information is used by both external and internal users,including investors, creditors, managers, and executives. These users must analyze the information in order to make business decisions, so understanding financial statements is of great importance. 

D. Users of Financial Statements:
The financial statements are used by different categories of people for different purposes. The various users of financial...
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