Financial Statement Analysis

1088 WordsMay 13, 20135 Pages
Abstract When developing a business financial statements show the flow of money into the business and money out of the business. The four parts of a financial statement are; income statement, balance sheets, cash flow, and retained earnings. The limitation of financial statements does not show health and performance organizational. Common-size and ratios are useful in financial analysis. Learning different knowledge about financial statement can help a financial analysis to balance the statement and keep account of the companies finance. Financial Statement Analysis The purpose of financial statements is to show the flow of money into, though, and out of business. Financial statements are broke down into four parts that are: income statements, balance sheets, cash flow statements, and retained earnings. Financial statement provides purpose and information about a company’s financial situation. Earnings per share are also showed on the income statement and shows the shareholder has received if profits were paid (dividends) by per each share own. Cash flow statements show cash on hand which is important to a company because cash on hand will help business with there every day activities. In order for a business to operate there must be cash on hand to pay expenses and but assets. Cash flow statements will help companies keep account of inflow and outflow of cash and reveal if cash was or was not develop by the business. The income sheet and balance sheet helps one provide information for the cash flow amounts and show decrease or increase of cash on the reporting period. Retained earnings occur after assets and liabilities and a balance sheet is developed. The assets, liabilities, and balance sheet will provide information to the stockholder whether one has a positive or negative equity. Retained earnings are

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