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Government and Institutional Accounting

In your role as the financial manager, you routinely review your firm's financial statements and financial ratios to evaluate the financial health of your company.

How does one review and analyze financial statements in a for-profit company?
How does this compare to how financial statements are analyzed for a nonprofit organization?

Solution Preview

When we analyze financial statements for both entities, we are essentially looking at the same areas, although the numbers mean slightly different things. When we review the financial statements for a for-profit company, we are determining the financial health and stability of the company. Management will first generally look at the income statement, and more specifically, at the company's bottom line (net income). This is a vital area in a for-profit company, as it shows exactly how profitable the company is, at first glance. A net loss ...

Solution Summary

This solution explains how financial statement review and analysis is performed, and the differences in this review between a for-profit and non-profit company.