Key Financial Reports

Allison Berenberg. Key Financial Reports.

[Audio] Balance statement shows how much a company is worth. It will put cash first on the list because it is the easiest to obtain, physical items on the other hand must be sold and then converted to cast, so they are lower on the list. Assets are also listed by highest price to lowest. After everything that could be sold for profit, it will also show the owners equity..

[Audio] Income statements shows the financial position a company is currently in. They are used to show the money coming in to the company. Management will check up on them monthly to look out for any imperfections while investors only need to see it occasionally. In the end, the statement will be able to show the net income or net loss of the company..

[Audio] Shareholders want to see this so they can see where the money is winding up. It will include receipts and cash payments to track all money going out the the company. It will also be an indicator if they company needs to improve or handle their money more wisely..

[Audio] All reports are used to be able to account for the success or failure of a company. Each report plays into one another to keep track of all financial records. It helps keep the company clean of fraud or mis use of money..

[Audio] All three reports could be used to help one another out. The income statement could be used to see if the company is making money, if it is not, they can use the balance sheet to sell some property. The income statement shows what the company is using their revenue on to be able to buy more products. On the other hand, the Statement of cash flow is used to account for money other than it being used for products like investments or financing activities. All three are used to determine the success of the company..

[Audio] First, I would look to see if the company is making money. If their revenue is less than their expenses, I would look to change the vendors. Changing up where the money is allocated could help, less for other expenses and more for advertising could help push out products. If it does not work out, maybe use the balance sheet to see if anything could be sold that is not necessary for the company. They could collect all data to see if they could afford to keep unnecessary items, or move the money around to create a bigger revenue. Second, Looking at employees could help. Seeing how they operate in the day to day expenses and how they handle the company money could show how it is allocated. Employees should be looking to find the cheaper vendor that they can trust. Also seeing the numbers on the balance sheet adding up with the numbers on the statement of cash flow to make sure the correct products are coming in. Something else to look at is the revenue justifying all the labor hours being paid..

[Audio] All three sheets are different in their own ways. But they all come together to show how the company is making their money. It is useful to shareholders and executives so they can see the success. It also shows where there needs to be more work for the company. The reports are a quick glance at the core of the company and easily accesses how to move forward with a successful company..