Financial Statements
Financial Statements and Managerial Reports
Financial statements and managerial reports are important tools that are used to keep the firms’ investors informed of financial decisions made by the organization. The key tools used include three major components. Theses components are the income statement, the balance sheet, and the statement of cash flow. This report will explain the purpose of each report and identify the components of each.
The first tool that I would like to discuss is the income statement. The main function of the income statement is to explain the profitability of an organization over a defined period. This period could be monthly, every three months, or the expected business cycle of one year (Block & Hirt, 2005). The income statement is a stair step approach that explains the profit or loss realized by a firm after each expense is deducted.
The first section of the income statement will show operating profit. Operating profit is defined as gross profit......
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Approximate Word Count: 999
Approximate Pages: 4 (250 words per double-spaced page)
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