Financial management 3

 are a collection of summary-level reports about an organization's financial results, financial position, and cash flows. It includes: Income statement, Balance sheet, Statement of cash flows

• Financial statements

• Financial reporting

• Tax purposes

  uses financial statements to disclose financial data that indicates the financial health of a company over during a specific period of time.

• Financial statements

• Financial reporting

• Tax purposes

  The most important reason to use financial reports is that you have to and required by law to do so. Businesses that make a lot of profit have to pay quite a lot of taxes.

• Financial statements

• Financial reporting

• Tax purposes

  Potential investors want to know how well the company is doing before they invest. Investors and creditors can use this information to better understand the company’s position and capital mix.

• Showing Financial Condition 

• Financial reporting

• Tax purposes

  The information on a balance sheet is a snapshot of a company’s assets, liabilities and quite at the end of a financial period. Financial reporting done on an income statement shares results about sales, expenses and profit or losses. Using the income statement, investors can both evaluate a company’s past income performance and assesses future cash flow.

• Showing Financial Condition 

• Evaluating Operations

• Tax purposes

A company’s profits are reported in the income statement but provide no direct information on the company’s cash exchange. A company incurs cash inflows and outflows during a period from non-operating activities, namely investing and financing. The cash flow statement shows the exchange of cash between the company and the outside work during a period of time.

• Evaluating Operations

• Examining cash flows

• Tax purposes

• Showing financial condition

The statement of shareholders’ equity is important to equity investors. It shows the changes to various equity components like retained earnings during a period. Shareholder equity is a company’s total assets minus its total liabilities and represents a company’s net worth.

• Evaluating Operations

• Examining cash flows

• Tax purposes

• Sharing shareholders equity

When a business needs to make a decision, analyzing financial statements is crucial. Managers can look at the value of the assets that a business currently holds and decide if they can afford to purchase more.

• Decision making, planning and forecasting

• Examining cash flows

• Tax purposes

• Sharing shareholders equity

Accurate financial reporting can help business’s catch costly mistakes and inter errors early on in the process. There is no better way to detect illegal financial activities than catch discrepancies in financial statements

• Decision making, planning and forecasting

• mitigate errors

• Tax purposes

• Sharing shareholders equity

is the most important report that corporations issue to stockholders

• balance sheet

• Assets

• Annual report

• liabilities