Evaluate the Financial Performance of a Business Assignment

Evaluate the Financial Performance of a Business - Assignment ExampleBalance sheet In behave recital and Cash bleed avowal. These argon the sanctioned statements normally ready by profit-oriented corporations. These statements help in knowing the profitability and financial soundness of the pedigree concern. These are prepared at the end of a given period of time. Financial statements are utilize as an important tool to communicate the financial information to parties outside the organization (such as investors, creditors, and opposite external decisions makers). The Balance Sheet The purpose of preparing balance sheet is to report the financial position (amount of assets, liabilities, and dealholders equity) of a firm during a particular period of time. A balance sheet contains complete information astir(predicate) assets, liabilities, and shareholders equity of the union. Assets Assets are things which have economic value and that which are owned by the company. It inclu de conspicuous asset, such as plants, trucks, equipment, and inventory. It also includes intangible asset, such as trademarks and patents. Cash itself is an asset. Tangible asset great deal be divided into two, Current asset and fixed asset. Current asset represent the companys liquidity. This is where companies list all of the stuff which can be converted into cash in a minuscule period of time, usually a year or less (Kennon 2012). Fixed asset is an asset held with the purport of being used for the purpose of producing or providing goods or services, and it is not spurioust for sale in the normal hang of business (Accounting for Fixed Assets n.d). Liabilities Liabilities include all kind of obligation that a company have. The term liabilities mean the amount of money that a company owes to others. Shareholders equity It is also called capital or net worth. The succeeding(a) formula summarizes what a balance sheet shows ASSETS = LIABILITIES + SHAREHOLDERSEQUITY Income Statem ents Income statement is a statement which shows the revenue that earned by the company during a specific period of time (usually for a year or some mickle of a year Income statement also shows the expenses, and the cost associated with the earning of revenue. Income statement also gives information regarding how much the company earned or lost over a period of time. This statement helps to calculate earnings per share (EPS), and it also tells how much money shareholders would get, if the company decides to distribute the whole earnings of the company. Income statement can be also called the statement of operation, or statement of earnings. Statements of Cash Flow A cash flow statement is a statement that contains a detailed report regarding the companys inflows and outflows of cash. Cash flow statement is helpful in knowing the net increase or decrease in cash for the period. It is prepared by using the information and reports in the companys balance sheet and income statement. Ca sh flow statement is helpful in recognizing the, changes in cash balance(increase or decrease) sources of cash uses of cash There are three parts included in the cash flow statement. They are (1)operating activities (2)investing activities and (3) financial support activities. 2. Compare appropriate formats of financial statements for different types of business The financial statements explain from where a companys funds come from, where it goes and where it is at present. Owners and CEOs use these statements to manage a business, bankers to check its creditworthiness, and investors to