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Financial Statement Essay

719 words - 3 pages


Different Types of Financial Statements
ACC/561 Accounting
April 12, 2012
Different Types of Financial Statements
To assess a company, we need to understand their financial statements. The statements are prepared to either monthly or quarterly show how a company is doing. The results from the financial statements can help managers and stakeholders to make financial decisions. The following are four types of financial statements.
Balance Sheet- “The balance sheet represents a snapshot of the company’s financial position at any given point of time”, it ...view middle of the document...

Managers decide to retain some funds to use for financing, operations, research, and development and growth.
Which financial statement, or statements, would be of most interest to investors?
The financial statement, which is useful to investors, would be the Balance Sheet. Investors are interested in looking at past and forecasting future income. Investors would be able to buy and sell stock based on their future performance. For example, if an individual believes Facebook will have a successful future, it would be a good idea to buy stocks. Another statement that will be helpful for investors would be the Retained Earnings Statement. By evaluating the Retained Earnings Statements, companies can reinvest for future expansion or their operations.

Which financial statement or statements would be of interest to creditors?
The Balance Sheet Statement would be of interest to creditors because they would be able to predict if they will be repaid. Creditors review the company’s assets and liabilities to make sure they have enough cash in hand for immediate use. As explained on (Wiley & Sons) “They also look at the relationship between debt and stockholders' equity to determine whether the company has a satisfactory proportion of debt and common stock financing.”

Which financial statement, or statements, be of most interest to management?
For management,...

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