Asked Dec 9, 2019

Name and briefly explain the three major financial statements?  How does each relate to the financial management of a business? 


Expert Answer

Step 1

The statement that reveals the financial activities of a business along with its financial performance is referred as financial statement. Every business keeps record of financial activities which are audited by the accountant, government agencies and other firms or institutions.

Step 2

There are three major financial statement which are as follows:

  • Balance sheet: This statement includes information about company’s assets, liabilities and shareholder’s equity.
  • Income statement: The income statement of any company reveals the net profitability as expenses incurred and revenues earned are recorded.
  • Cashflow statement: This statement is prepared by the company to check the cash generation ability of the firm.
Step 3

Financial management is the process by which a financial manager plan, orga...

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