Financial reporting is very essential for running and analyzing its financial activities and every day operations. What do you look for when you need to see a person’s medical conditions? Obviously the medical reports and get them analyzed by a doctor. But when it comes to the health of your company, you need to look at the financial statements.
Yes financial statements provide a precise overview of the firm’s health and performance. They help us scrutinize the current working and forecast the future earnings and performance through annual reports. Financial statements of any company are also important it’s mangers. Because the published financial statements help managers communicate with outside investors and other stakeholders. It provides a direct explanation of the firms operation based on financial grounds.
There are multiple reports that fall under the financial reports of an organization. These different reports focus on different aspects of company’s performance. The most basic and important reports are balance sheet, income statement, statement of cash flows and stock holder’s equity statement. Each of these four statements and reports are very important. But you can never overlook, the implications of cash flow. It is because it comes down to cash in the end so you need to clearly understand how to manage it .This is the reason why cash is considered the king.
Always remember these words by David Tangs, “The three most negative words in English are: negative cash flows.” He is absolutely right saying it.
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