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Identify the four basic financial statements

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How the statementes interrelate with each other. Why are they usefull to managers, investors, creditors,and employees.

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The solution identifies the four basic financial statements and how there interrelate/

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Identify the Four Financial Statements

Financial statements are summaries of monetary data about an enterprise. The most common financial statements include the balance sheet, the income statement, the statement of changes of financial position and the statement of retained earnings. These statements are used by management, labor, investors, creditors and government regulatory agencies, to assess the company's?

? Ability to generate income from sales
? Ability to pay its creditors, especially if it has short or long term debt
? Ability to generate cash to pay its bills

. Primary users of financial statements are:
? Owners/investors - places more emphasis on the profit side of the business; will focus most likely on the income statement
? Lenders - tends to give more importance to balance sheets and cash flow.
? Managers - uses financial statements to gauge the performance of the company or business.
? Suppliers - concerned with the ability of the company to make payments. They are inclined to look at cash flow and how "liquid" a company is.
? Customers - looks into a company's financial ...

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