Financial Statements Essay

326 words - 2 pages

Katrina Baron
Financial Statements
The four basic financial statements are the balance sheet, income statement, statement of cash flow, and the statement of retained earnings. The balance sheet depicts the current financial circumstances of the company. This reports the company’s assets, liabilities, and net equity as of a given point in time. The income statement reports the company’s cost and revenues. This reports the company’s income, expenses, and profits over a period of time. The ...view middle of the document...

The statement of retained earnings reports the changes in equity. Basically this explains the company’s retained earnings over the reporting period.
The internal users would be managers and employees that use the financial statements. They would use the financial statements to obtain the data to use for any future budget concerns. The internal users can use the data to set performance goals for the company. They can also use the data to see where the company needs to increase revenue from a certain department in the company. Along with being able to see where they need to make cutbacks. The internal users rely on the financial statement to direct the company in all its daily activities. The external users for the financial statement would be investors and creditors. The data obtained from the financial statement would be used to make decisions to buy, hold, sell, or lend. The investors would use the data to review the company’s income to predict the future income of the company. The creditors also use the data to analyze the future of the company. The creditors need to know that the company will be able to pay back the money they are borrowed. The external users of the financial statement find the data obtained useful in the making of decisions regarding the interest in working with this company or not.n

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