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Essay / Research Paper Abstract
This 4-page paper discusses the usefulness of financial statements with particular focus on cash-flow statements. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MTfinastak.doc
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Unformatted sample text from the term paper:
describe the state of a companys financial health. When information is properly presented through a financial statement, stakeholders understand how well a company is doing as it pertains to sales,
how much debt its carrying and how much inventory it has stockpiled. As such, there are many users of financial statements.
The main users are a companys management. Financial statements are of huge assistance when it comes to making large-picture decisions. If, for example, inventory ratios are on the high side,
management knows it has to do something to reduce inventory (either decreasing manufacturing, decreasing sales prices or reducing the number of products on the market). Such statements can also determine
what resources need to be obtained or dismissed. Other stakeholders include investors, suppliers and, to an extent, industry competitors. Investors rely on the financial information to determine if they want
to invest capital in a given company. Suppliers rely on the information for an understanding as to when theyll get paid (for example a company that is highly leveraged -
in other words, is taking out a lot of debt - is not a company a supplier wants much to do with). And the competition likes to examine financial statements
as a comparison to their own. As such, it goes without saying that different stakeholders have different uses for the information in these financial statements.
But what, exactly, makes financial statements and accounting statements useful? For one thing, they provide a good snapshot as to a companys liquidity - in other
words, its ability to make immediate payments to vendors, employees, investors, and to pay off debt as well. If a company has a high level of liquidity, it means the
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