Printable free 14 employee witness statement forms in ms word pdf formal statement template pdf, Financial statements are formal documents of their fiscal activities of a business, person, or other entity. It provides a synopsis of a company or person’s fiscal condition in both short and long term. It’s a tool used to communicate financial information about an entity to those who would like to make decision and informed judgments concerning the entity’s financial position, results of performance and cash flows. There aren’t any financial statements Balance Sheet, Income Statement, Statement of Cash Flows and Statement of changes in owner’s equity. All these four financial statements have unique function but they are interrelated.
Financial statement analysis entails careful selection of data from financial statements for its main purpose of forecasting the financial health of the company. This can be accomplished by analyzing trends in key financial data, comparing fiscal data across businesses, and analyzing key financial ratios.
Managers will also be broadly concerned with the financial ratios. First the ratios supply indicators of how well the organization and its business units are performing. A few of these boosters could ordinarily be used at a balanced scorecard strategy. The specific ratios selected are contingent on the business’s strategy. For example a business which wishes to highlight responsiveness to clients may closely track the stock turnover ratio. Since managers need to report to shareholders and might desire to increase funds from external sources, managers must focus on their financial ratios used by external inventories to assess the provider’s investment potential and creditworthiness.
Although financial statement analysis is an extremely useful tool, it has two limitations. Both of these constraints demand the comparability of financial information between companies and the need to look beyond ratios. Comparison of a single company with the other can offer valuable hints about the financial health of a company. Unfortunately, gaps in accounting methods between companies sometime makes it difficult to compare with the firms’ financial information. For instance if one company values its inventories by the LIFO method and the other firm by average price method, then direct comparisons of financial information such as stock valuations are and price of products sold between the two businesses might be deceptive. Some times enough information are introduced in foot notes to the financial statements to restate data to a similar basis. Otherwise, the analyst should remember the absence of comparability of the information before drawing any definite conclusion. Nevertheless, in spite of this limitation in mind, comparisons of important ratios with other companies and with business averages often suggest avenues for additional investigation.
A business’ financial statements are a direct relationship of how well a company is performing and if they are in a position to hire new workers or layoffs. Another option for businesses to reduce costs is by sending as much job abroad in which the wages are much lower and where the regulatory is a lot simpler. Nowadays, most big corporations only want as many U.S. employees as absolutely essential. In a world where labor has been globalized, a few businesses shell out massive amounts of cash to American employees when they can save paying wages to employees overseas. In the old times, a individual could go to school, get a good paying job with one company for 30 years and retire with a wonderful pension. Unfortunately for the current creation, corporations don’t have the same loyalty, when a company reaches a monetary barrier; a few of the simplest and fastest ways to lower costs is to remove its employees.
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