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Financial Statements

Financial statements are brought into play by managers to footmark performance,

allocations, and other measures. They are also used as mechanisms to frame decisions, inspire

companies and maintain a vivid mindset. These financial statements are the balance sheet, the

income statement and the cash flow statement.

The balance sheet shows the company’s assets, liabilities and shareholders’ equity for the

intention of the stakeholders to understand the diagnosis. It depicts a financial image at a specific

time ,for example, as of March 1, 2020.The income statement, which is also known as the profit

and loss statement, gives an overview of the sales revenue, operating expenses and profits made.

It is expressed over a period of time, for example, 1 year. The income statements allow

businesses to compare trends in income and expenses over time (Catherine Cote). The statement

of cash flow depicts cash movements, that is, the inflows and the outflows of money over a

period of time. It shows increases and decreases in cash. The cash flow statement demonstrates

the business’ capability of operating in both the short and long term (Catherine Cote).

When evaluated together, these financial statements hold an expansive view of the

financial status of an organization. You can measure impact of your efforts on an organization or
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your business venture by using the cash flow statement to learn whether the cash invested

resulted in the net income you were expecting. By learning that, you can narrow down on where

you made your mistake by either investing a lot than you earned later on or on where you

profited the most by investing wisely. The financial statements are valuable reserves that can be

used to bolster your assets and take control of your team

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Works cited

https://corporatefinanceinstitute.com/resources/knowledge/accounting/three-financial-

statements/(2017)

Cone, Catherine. https://online.hbs.edu/blog/post/how-managers-use-financial-statements (16

June 2020)