Printable free statement of work templates smartsheet completion statement template, Financial statements are appropriate records of their fiscal activities of a business, person, or other thing. It provides a synopsis of a business or person’s fiscal condition in both brief and long duration. It is a tool used to convey financial information of an entity to people who wants to make decision and informed decisions about the entity’s financial position, results of operation and cash flows. There are four financial statements Balance Sheet, Income Statement, Statement of Cash Flows and Statement of changes in owner’s equity. These four financial statements have exceptional function but they are interrelated.
The use of a financial statement will be to reflect the financial weakness or strength of a business. Internally, it’s used by a business to produce fiscal decisions like hiring new workers or even layoffs. When companies are financially incapable they look to cut cost and the quickest way to decrease costs is to eliminate employees. Today in a struggling economy, employees are regarded as expensive liabilities, and businesses and governments are trying to decrease those liabilities as much as possible.
Recognizing financial statements assist owners and managers make better decisions monitoring the business and strategy for future expansion. Financial statements give a thorough grasp of the company’ strengths and weaknesses. They are essential for business owners who intend to succeed and expand their organization.
A inexperienced adviser might presume that ratios are adequate in themselves as a basis for judgment regarding the future. Nothing can be further from the truth. Conclusions based on ratio analysis must be considered tentative. Ratios should not be seen as an end, but instead they need to be viewed as a beginning point, as signs of what to pursue in greater detail. They raise may questions, however they seldom answer any question by themselves. Besides ratios, other sources of information must be analyzed in order to make judgments about the future of an organization. They analyst must look, as an instance, at business trends, technological changes, changes in consumer tastes, changes in wide economic elements, and changes within the business itself. A recent shift in an integral management position, for instance, might provide a basis for optimism about the near future, though the previous performance of the firm may have been mediocre.
A company’ financial statements are an immediate connection of how well a company is doing and if they are in a position to hire new employees or layoffs. Another alternative for companies to cut costs is by sending as much work abroad where the salaries are much lower and in which the regulatory is much simpler. Today, most large corporations only need to have as many U.S. employees as absolutely essential. In a world where labour was globalized, a few businesses shell out enormous amounts of money to American employees when they could save paying lower wages to workers abroad. In the old times, a individual could go to college, get a great paying job with a single company for 30 years and retire with a great pension. Unfortunately for the current creation, corporations don’t have exactly the same loyalty, when a business reaches a monetary barrier; a few of the easiest and quickest ways to lower costs is to remove its employees.
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