- The Three Financial Statements That Are Most Important Are The Balance Sheet The Income Statement And The Cash Flow St 1 (55.97 KiB) Viewed 26 times
- The Three Financial Statements That Are Most Important Are The Balance Sheet The Income Statement And The Cash Flow St 2 (55.97 KiB) Viewed 26 times
The three financial statements that are most important are the balance sheet, the income
statement, and the cash flow
statement. A
company's balance sheet provides information on what the
company is worth from a book value perspective. The balance sheet is broken into three categories and provides sums of the
company's assets, liabilities, and shareholders' equity on a specific date. Asset turnover, the quick ratio, receivables turnover, days to sales, debt to assets, and debt to equity are ratios used when looking at the balance sheet. The balance sheet is important because it give interested parties an idea of the
company's financial position by showing what the
company owes versus what it owes A
company's income
statement provides details on the revenue a
company ears and the expenses involved in its operating activities. It provides more particular detail on the holistic operating activities of a
company. It shows the direct, indirect, and capital expenses a
company incurs. Ratios used for analyzing the income
statement include gross margin, operating margin, net margin, and tax ratio efficiency. The income
statement is important because it helps owners decie whether or not they can generate more profit by increasing revenues, decreasing costs, or doing both. The cash flow
statement provides a view of a
company's overall liquidity by showing cash transaction activities. It reports all cash inflows and outflows over the course of an accounting period with a summation of the total cash available. The cash flow
statement is important because it can help determine whether or not a
company has enough cash/ liquidity to pay its expenses. These statemts are more then just accounting and numbers because they each can help managers, investors, lenders, and stock-holders understand and analyze a
company's performance from multiple angles. The balance sheet, income statements, and cash flow
statement each offer details with information that is interconnected with one another. Together, all three statements give a detailed report of the
company's operating activities