Statement of Cashflows

Essay by rococoCollege, UndergraduateA+, March 2007

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Accounting is the information about a business that is communicated, and is sometimes called the language of business. Financial statements are designed to assist investors and creditors in deciding where to place their investment. Financial statements are also used to keep track of the performance records of a business. Financial statements are used for evaluating profit and liquidity.

The income statement and balance sheet help interested investors to make a well-informed decision to invest in a company and or business. By using the information on the balance sheet and income statement the investors will have the current financial information and the investors will be able to forecast future profits and the cash flow of the company.

Many people that include investors, management, government agencies, creditors and labor unions have a basic need for accounting information to make well-informed decisions. The major role of accounting information is to provide information in order to make decisions and it is sometimes referred as a means to an end.

Stakeholders and investors need accounting information on a regular basis to help them monitors the company's success.

The balance sheet shows the assets and liabilities of a company. The balance sheet shows the company's record on any particular date. The income statement shows the track record of the company and the profitability of the company. A financial analyst is the qualitative information. There are some ratios that are used now and have become more popular today for evaluating financial statements. Our mission is not to try and tell our readers which one is right or wrong but to give them advice so they will be able to use them the right way.

Ratio analysts helps us to determine whether a business is doing better this year then it has the previous year. Through Ratio analysts...