Financial performance

Topics: Balance sheet, Generally Accepted Accounting Principles, Financial statements Pages: 3 (819 words) Published: February 19, 2014
Financial statements are the medium by which a company discloses information concerning its financial performance. Followers of fundamental analysis use the quantitativeinformation gleaned from financial statements to make investment decisions. Before we jump into the specifics of the three most important financial statements - income statements, balance sheets and cash flow statements - we will briefly introduce each financial statement's specific function, along with where they can be found. 

The Major Statements 
The Balance Sheet 
The balance sheet represents a record of a company's assets, liabilities and equity at a particular point in time. The balance sheet is named by the fact that a business's financial structure balances in the following manner: 

Assets = Liabilities + Shareholders\' Equity

Assets represent the resources that the business owns or controls at a given point in time. This includes items such as cash, inventory, machinery and buildings. The other side of the equation represents the total value of the financing the company has used to acquire those assets. Financing comes as a result of liabilities or equity. Liabilities represent debt (which of course must be paid back), while equity represents the total value of money that the owners have contributed to the business - including retained earnings, which is the profit made in previous years. 

The Income Statement 
While the balance sheet takes a snapshot approach in examining a business, the income statement measures a company's performance over a specific time frame. Technically, you could have a balance sheet for a month or even a day, but you'll only see public companies report quarterly and annually. 

The income statement presents information about revenues, expenses and profit that was generated as a result of the business' operations for that period. 

Statement of Cash Flows 
The statement of cash flows represents a record of a business' cash inflows and...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • financial performance Essay
  • Essay on Financial Statements week 1
  • Financial Statements Paper
  • financial Essay
  • Pay for Performance Essay
  • Performance Theory Essay
  • Analysis of a Financial Performance of an Organization Essay
  • Essay on Financial Performance Review

Become a StudyMode Member

Sign Up - It's Free
4x Bar Stool Dining Chairs Swivel Barstool Kitchen Leather Gas Lift Black White | George Lopez | Captulo 689 de One Piece