Financial Statement Differential
Financial Statement Differentiation
Jeff Leo
ACC/561 - Accounting
Instructor: Grace Kalil
May 27, 2013
University of Phoenix ACC/561 course textbook Accounting Tools for Business Decision Making Chapter One provides in-depth descriptions of financial statements generated by a business to analyze accounting information. The balance sheet, income statement, retained earnings statement and statement of cash flows reports provide a quantified view of the financial health of a business. Financial statements are generated to evaluate past, present and future performance.
The questions and answers below identify the statement(s) used by external users (investors and creditors) or internal users (executives, managers) to analyze business financial health. Financial statements guide creditor and investor’s credit and funding decisions and management uses this information to make strategic and tactical business decisions.
“Which financial statement, or statements, would be of most interest to investors?” (University of Phoenix, 2011, p.2). Investor interests include 1) statement of cash flow, 2) income statements, 3) balance sheets and 4) retained earnings report. A composite of information indicates the viability to earn cash and pay debts and interest; a long view of overall business health; and indicates how management is investing in the business. Essentially investors want to see the entire picture of the business. Furthermore, using the balance sheet and income statements investors can calculate ratios to judge if targets are met and measure liquidity of the business.
“Which financial statement, or statements, would be of most interest to creditors?” (University of Phoenix, 2011, p.2). Creditor’s interests include 1) balance sheets, 2) income statement and 3) statement of cash flow. When deciding to extend credit to a business, stability, profitability, and ability to pay debts are the primary concerns of creditors. The balance sheet displays
Jeff Leo
ACC/561 - Accounting
Instructor: Grace Kalil
May 27, 2013
University of Phoenix ACC/561 course textbook Accounting Tools for Business Decision Making Chapter One provides in-depth descriptions of financial statements generated by a business to analyze accounting information. The balance sheet, income statement, retained earnings statement and statement of cash flows reports provide a quantified view of the financial health of a business. Financial statements are generated to evaluate past, present and future performance.
The questions and answers below identify the statement(s) used by external users (investors and creditors) or internal users (executives, managers) to analyze business financial health. Financial statements guide creditor and investor’s credit and funding decisions and management uses this information to make strategic and tactical business decisions.
“Which financial statement, or statements, would be of most interest to investors?” (University of Phoenix, 2011, p.2). Investor interests include 1) statement of cash flow, 2) income statements, 3) balance sheets and 4) retained earnings report. A composite of information indicates the viability to earn cash and pay debts and interest; a long view of overall business health; and indicates how management is investing in the business. Essentially investors want to see the entire picture of the business. Furthermore, using the balance sheet and income statements investors can calculate ratios to judge if targets are met and measure liquidity of the business.
“Which financial statement, or statements, would be of most interest to creditors?” (University of Phoenix, 2011, p.2). Creditor’s interests include 1) balance sheets, 2) income statement and 3) statement of cash flow. When deciding to extend credit to a business, stability, profitability, and ability to pay debts are the primary concerns of creditors. The balance sheet displays
References: Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2009). Accounting Tools for Business Decision Making (3rd ed.). Hoboken, NJ: John Wiley & Sons, Inc. University of Phoenix. (2011). Course Syllabus: Financial Statement Differentiation Paper. Retrieved from University of Phoenix, ACC/561 Version 4 Accounting website.