The Four Types of Financial Statements

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Four Types Of Financial Statements Introduction The four basic financial statements including the balance sheet, income statement, statement of retained earnings, and cash flow statement together form the foundation of financial reporting for a business. The intent of this paper is to define the purpose of these four statements, how these statements are useful for internal managers and employees, and how they are useful for those external to a company incouding investors and creditors. Analysis of the Four Types of Financial Statements The balance sheet provides an immediate definition of the assets, liabilities and owner's equity a given company has been able to generate over a specific period of time. Balance sheets are invaluable for seeing the financial health of a given enterprise, and they also form the foundation of ratio-based analysis of firm liquidity, profitability, production and asset efficiency and performance. Balance sheets also define current and fixed assets, in addition to current and long-term liabilities. These two delineations are invaluable for internal managers and employees to see how the company is performing in generating long-term shareholder value and also how liabilities are being managed. These measures of performance on the balance sheet are also invaluable for investors and creditors as well, they show how well a company is delivering a return on the investor's paid-in capital and how credit-worthy a business is. Creditors require
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