Financial Statements: Overview of Performance and Analysis |

School: Southern New Hampshire University - Course: FINANCE AC 201 - Subject: Accounting

Summary Report: Financial Statements2 Introduction Reports that are created after transactions have been documented and compiled are known as financial statements. An organization's income statement, statement of stockholders' equity, balance sheet, and statement of cash flows are its four main financial statements. A company's income statement lists its expenses and revenues for a given time period. Net income, net profit, or earnings are terms used to describe the amount of revenue that exceeds expenses on an income statement. The statement of stockholders' equity tracks changes over time in stockholders' equity. A connecting piece between the income statement and the balance sheet, the statement of stockholders' equity is created following the income statement but before the balance sheet. Assets, liabilities and stockholders' equity as of a particular date are all listed on the balance sheet. The numerous financial statements update the corporation on several business- related topics. Process These financial statements include different information on each sheet: the income statement shows revenues, expenses, and net/loss income; the statement of owner's equity shows changes in the company's equity; and the balance sheet shows the company's assets, liabilities, and equity for the first month of operations. The interrelationship between these three financial reports is crucial for financial analysis and has an effect on the company's transactions. Liquidity, solvency, and profitability were the three metrics utilized to assess the company's financial success. The ability of the business to turn assets into cash to meet its short-term debt obligations is known as liquidity. In order to meet its debt commitments on an ongoing basis and not only in the short term, but a firm must also be solvent. This means that it must be able to pay its periodic interest payments and return the face amount of debt at maturity. The ability of the business to

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