Financial statements are very important tools which are used to assess the key information regarding the financial health, operating results, liquidity & profitability of a company.

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1)Financial statements are very important tools which are used to assess the key information regarding the financial health, operating results, liquidity & profitability of a company. They are usually utilized by shareholders, creditors & potential investors to make important investment decisions by predicting the future profitability potential of the company by analyzing current financial statements. An example of this can be thought of in terms of the release of income statement of a company during a quarter severely impacts the share price as investors/creditors revisit their plan for the company and accordingly increase or decrease their positions.

(1A)Expand this discussion by comparing Balance Sheets to Income Statements. How do they differ, and do they have specific uses? Explain your answer.

 

(2)Analyze how cash restraints affect small businesses. What financing alternatives are available to small businesses to support their operating activities?

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