Essay on Financial Statement Review

682 Words Apr 9th, 2013 3 Pages
Financial Statement Review
University of Phoenix

Financial Statement Review
Financial statements play a significant role in each and every type of business. The financial statements provide a wealth of information to auditors, creditors, investors, suppliers and other important venues that need access to this type of information. This paper will discuss four different types of financial statements and how they are utilized by vendors, creditors and others. The four financial statements that will be reviewed are the income statement, balance sheet, cash flow statements and statement of retained earnings.
Income Statement Beginning with the income statement, the information provided includes
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It is an inclusion to either the balance sheet or the income statement and not a stand-alone financial statement.
Importance of Financial Statements Financial statements have a significant impact on the successfulness of a company. Depending on whether you’re an investor, creditor or manager, the information that is most crucial will depend on who you are. An investor is concerned with the bottom line and the overall value and growth of a company. A company’s earnings and revenue can be compared to the stock price. As an investor the balance sheet, income statement and statement of cash flows is important. Investors will review the information and determine if the company overcame any obstacles and if there is still room for growth. They will also review the net income / loss and the history over previous years to determine any growth or potential for growth. As a creditor, information that is important is the current amount of debt and the amount of cash that is available to pay back that debt. The statement that would be most beneficial would be the balance sheet. The balance sheet contains all of the assets to include cash and cash equivalents and current liabilities as well. It is important to know the current ratio for a creditor to determine the worthiness of the company and the ability to pay both short