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Financial Statement Application

As EEC's corporate business financial analyst, you will be required to provide the EEC board of directors and executive management team with essential financial information on the management of the EEC enterprise. In a memo to the board of directors, discuss the information found in each of the following financial statements and how that information is used for the planning, controlling, and decision making of the company. Also, discuss what some of the reports and ratios are that the following financial statements that can be develop. (As you analyze the statements listed below, keep in mind that these statements are the foundation of financial accounting and are developed from transactions that happened during the time period of the statement. This information is used by external users as well as internal users. Managerial accounting focuses on the use from the internal user perspective. The information from these statements is used to analyze and establish budgets, forecast, variance reports, and ratios, among other things, with the key being that they are only used internally).

Balance sheet
Income statement
Statement of cash flows
Statement of stockholders' equity

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USES OF FINANCIAL STATEMENTS INFORMATION AND RATIOS

To know the financial condition of a company, from the actual picture up to the results of its operations, a stakeholder looks into its financial statements. As noted by Keown et al. (2002), the company's financial statements show how the company is doing financially as well as how its finances are being managed. Each of the financial statements provides significant information that may be used by the company and various stakeholders in determining areas that will form a basis of their finance-related decisions.

Balance sheet
As further noted by Keown et al. ( 2002), the balance sheet provides a snapshot of the firm's financial position at a specific point in time as it presents asset holdings, liabilities, and owner-supplied capital. Basically, it shows the company's uses (assets) and sources (liabilities and owners' equity) of funds. By looking into the company's assets, one may have an idea as to whether the company utilized its funds for current or short term holdings (current assets) or for long-term holdings (fixed assets). Current assets are either cash or assets that may be converted into cash within the accounting cycle or within one year. These are cash, accounts receivable, marketable securities, inventories, and prepaid expenses. Fixed assets that include land, plant, buildings, machineries, and equipment ...

Solution Summary

The financial statement applications for EEC;s corporate business financial analyst.

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