part 1 Flashcards
Define the financial report?
The financial report, also called annual report is the set of documents prepared by a company to explain the economic and financial performance at the end of a certain periods of time.
Define the income statement?
The income statement, also called Profit and loss statement (P&L) is the document that lists all the revenues and all the expenses measured by a company during a specific period. It is also the document that shows whether a company generated a gain or a loss during this specific period.
Define the balance sheet?
Balance sheet, is the document that presents all the “things” owned by a company and all the debts that the company has in a specific moment of time.
Define cash flow statement?
Cash flow statement is the document that lists all the activities of a company that affected cash during a certain period of time.
Define notes to the financial statement?
Notes to the financial statements is the section of the annual report where a company explains the accounting criteria used to calculate the information listed in the financial documents.
Define management report?
Management report (Management discussion or result of operations) is the section of the annual report where the top management provides an explanation on the economic and financial performance of the company.
Define financial ratios?
Financial Ratios are calculated from the information listed in the financial statements. We use them to analyze the financial health of a company and its economic performance. Another reason we use them is to make comparison between the financial health and economic performance of similar companies. We compare over time for the same company in order to identify trends and assess risks.
Why might partners be interested in analyzing the fashion statements of a company?
Partners will be, in order to verify if the company has generated gain or loss and if the capital that was invested is safe.
Why might tax administration be interested in analyzing the fashion statements of a company?
Tax administration will do this to verify the correct amount on which taxes should be paid.
Why might banks be interested in analyzing the fashion statements of a company?
Banks will read it to verify the company’s ability to pay back its debts.
Why might clients be interested in analyzing the fashion statements of a company?
Clients will in order to verify business’ continuity before placing new orders.
Why might suppliers be interested in analyzing the fashion statements of a company?
Suppliers will read it to verify the company’s ability to pay them back.
Why might management be interested in analyzing the fashion statements of a company?
Management will read the financial statements to understand the economic performance in the interests of management control.
Why might employees be interested in analyzing the fashion statements of a company?
Employees will read it to verify that the company is under control and will be able to pay them.
