Understanding Financial Statements: Importance and Analysis

Summary Report: Financial Statements2 Introduction The main purpose of financial statements is to show a company's financial health, how much money it has and how much it spends. The people who read financial statements use this information to make strategic decisions about capital. The financial statements are used for many different things, and each of those needs a better understanding of the statement. By looking at a company's income statement, you can find out how profitable it is. Depending on how the data are set up, the data on expenses can be used to figure out how much money was made and what kinds of expenses were made. The income statement is a great way to spot trends when looking at a company's financial performance over a long period of time. (Bragg, 2022) Process Based on its book value, the balance sheet shows how much cash a company has. It includes the assets, liabilities, and shareholders' equity of a business. Short-term assets like cash and accounts receivable can tell a lot about how well a business is doing. The company's costs and debts are both types of liabilities. A shareholder equity shows information about equity, capital investments, and net income that has been kept. On the balance sheet, the assets and the debts must add up to the same amount. This amount is called "book value," and it is one of the most important ways for a company to measure its success. It goes up or down depending on how well the company does financially.(Kenton, 2022) Financial Statement Analysis According to my assessment of the company's current month-to-month financial performance, they are in the black with a net income of $2,734.17. This is a good sign for the business. bringing the grand total of equity to $19984.17 at the conclusion. Currently, they are maintaining a profit margin of 56 percent. If the company is successful in attracting new