Financial_Statements

The four main financial statements that are important are the balance sheet, which gives information about what a company owns, what the company owes. An income statement shows how much a company has earned in money and how much money a company has spent over a certain period. A cash flow statement tells the exchange if money between the company and the outside world. The last statement is a retained earnings statement; a general statement that explains changes for the company’s retained earnings. This statement uses information from the income statement and supplies information to the balance sheet; retained earnings are part of the balance sheet. A balance sheet has detailed information about the company’s assets, liabilities, and shareholders’ equity. Assets are something that the company owns that has value. This usually is something that used by the company that will provide a service that can be sold. Assets include physical property such as; books, cars are equipment. Assets also include things that are not physical like trademarks. Liabilities are the amounts of money owed to someone else. Obligators are in many sorts, such as; the bank, building owner (rent), suppliers and employees. Liabilities also are ones that supply goods and services to customers in the upcoming future. Shareholders’ equity or also called capital and net worth; this is the money that is left if a company sold all of its assets and paid off all the liabilities. Leftover money belongs to the shareholders or the owners of that company. An income statement is the report that shows the amount of money the company has earned over a certain time (such as a year). The income statement shows the costs and expenses that may be associated with the earnings that revenue. The income statement will also show the report earnings per share (EPS). This is a calculation that tells how much money shareholders would receive if the company distributed all the net earnings for the period. Cash flow statement reports the company’s money that is coming in and going out. This is important to a company because the company needs to have enough money to handle all the expenses and purchase assets. The income statement can tell whether the company has made a profit, the cash flow statement can tell whether the company has generated cash. A comparative statement is financial statements for different periods; that allow the comparison of figures to illustrate trends in a company's performance. For a company’s future decisions, these statements provide useful information that will show if the company has the money, what the company owns and to whom they owe the money to, how long it will take to mane the money needed for future plans. Every company needs a good financial plan to keep the business running properly.