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Encyclopedia > Financial Statements
Corporate finance

Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Image File history File links Download high resolution version (1031x740, 688 KB)Midtown Manhattan looking North from the Empire State Building, 2005. ...


Working capital management

Cash conversion cycle
Return on capital
Economic value added
Just In Time
Economic order quantity
Discounts and allowances
Factoring (finance) Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analysis used to make these decisions. ... Cash conversion cycle or CCC, also known as the asset conversion cycle, net operating cycle, working capital cycle or just cash cycle, is used in the financial analysis of a business. ... Return on capital, also known as Return On Invested Capital (ROIC) is defined as NOPLAT / Invested Capital usually expressed as a percentage. ... Economic Value Added (EVA) is an estimate of true economic profit after making corrective adjustments to GAAP accounting, including deducting the opportunity cost of equity capital. ... Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated costs. ... Economic order quantity is that level of inventory that minimises the total of inventory holding cost and ordering cost. ... Discounts and allowances are modifications to the basic price. ... This article is about finance. ...


Capital budgeting

Capital investment decisions
The investment decision
The financing decision
The process of determining which potential long-term projects are worth undertaking, by comparing their expected discounted cash flows with their internal rates of return. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ...


Sections

Managerial finance
Financial accounting
Management accounting
Mergers and acquisitions
Balance sheet analysis
Business plan
Corporate action Managerial Finance is that branch of finance that provide tools for a companys financial managers. ... Financial accountancy (or financial accounting) is the branch of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, government agencies, owners, and other stakeholders. ... Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions. ... Acquisition redirects here. ... This article needs additional references or sources for verification. ... This is a summary article that covers many topics related to business plans - their content, how they are used, legal issues, and spoofs of business plans, among others. ... A corporate action is an event taken by a public company that has a direct financial impact on of its shareholders. ...


Finance series

Financial market
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation The field of finance refers to the concepts of time, money and risk and how they are interelated. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Financial supervision is government supervision of financial institutions by regulators. ...


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Historical financial statement
Historical financial statement

Financial statements (or financial reports) are formal records of a business' financial activities. Image File history File links Download high resolution version (1580x917, 184 KB) Keywords: Wachovia National Bank Winston, North Carolina 1906 File links The following pages link to this file: Financial statements ... Image File history File links Download high resolution version (1580x917, 184 KB) Keywords: Wachovia National Bank Winston, North Carolina 1906 File links The following pages link to this file: Financial statements ...


In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used, particularly by accountants. British English (BrE, BE, en-GB) is the broad term used to distinguish the forms of the English language used in the United Kingdom from forms used elsewhere in the Anglophone world. ... Accountant, or Qualified Accountant, or Professional Accountant, is a certified accountancy and financial expert in the jurisdiction of many countries. ...


Financial statements provide an overview of a business' financial condition in both short and long term. There are four basic financial statements:[1]

  1. Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities and net equity as of a given point in time.
  2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's results of operations over a period of time.
  3. Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.
  4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.


For large corporations, these statements are often complex and may include an extensive set of notes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements. This article needs additional references or sources for verification. ... An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue (money received from the sale of products and services before expenses are taken out, also known as the top line) is transformed into net income (the result after... Statement of retained earnings, also known as Statement of owners equity, is one of financial statements, it explains the changes in companys retained earnings over the reporting period. ... A cash flow statement is a financial report that shows incoming and outgoing money during a particular period (often monthly or quarterly). ... The Notes to Financial Statements are additional notes and information added to the end of the financial statement to supplement the reader with more information. ...

Contents

Purpose of financial statements

"The objective of financial statements is to provide information about the financial strength, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions."[2] Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities and equity are directly related to an organization's financial position. Reported income and expenses are directly related to an organization's financial performance.


Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently."[3]

  • Owners and managers require financial statements to make important business decisions that affect its continued operations. Financial analysis are then performed on these statements to provide management with a more detailed understanding of the figures. These statements are also used as part of management's annual report to the stockholders.
  • Employees also need these reports in making collective bargaining agreements (CBA) with the management, in the case of labor unions or for individuals in discussing their compensation, promotion and rankings.


2. External Users: are potential investors, banks, government agencies and other parties who are outside the business but need financial information about the business for a diverse number of reasons. Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project. ... A Collective agreement is a labor contract between an employer and one or more unions. ... A union (labor union in American English; trade union, sometimes trades union, in British English; either labour union or trade union in Canadian English) is a legal entity consisting of employees or workers having a common interest, such as all the assembly workers for one employer, or all the workers...

  • Prospective investors make use of financial statements to assess the viability of investing in a business. Financial analyses are often used by investors and is prepared by professionals (financial analysts), thus providing them with the basis in making investment decisions.
  • Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures.
  • Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company.
  • Media and the general public are also interested in financial statements for a variety of reasons.

Investment is a term with several closely related meanings in finance and economics. ... Domestic credit to private sector in 2005 Working capital (also known as net working capital) is a financial metric which represents the amount of day-by-day operating liquidity available to a business. ... Securities are tradeable interests representing financial value. ... This does not cite its references or sources. ... A debenture in finance, is a long term debt instrument used by governments and large companies to obtain funds. ... Taxes redirects here. ...

Government financial statements

See also: Fund accounting

The rules for the recording, measurement and presentation of government financial statements may be different from those required for business and even for non-profit organizations. They may use either of two accounting methods: accrual accounting, or cash accounting, or a combination of the two. A complete set of chart of accounts is also used that is substantially different from the chart of a profit-oriented business To meet Wikipedias quality standards, this article or section may require cleanup. ... There are very few or no other articles that link to this one. ... This article does not cite any references or sources. ... It has been suggested that Accounting scholarship be merged into this article or section. ... A chart of accounts is a list of all accounts tracked by a single accounting system, and should be designed to capture financial information to make good financial decisions. ...


Audit and legal implications

Although the legal statutes may differ from country to country, an audit of financial statements are usually, but not exclusively required for investment, financing, and tax purposes. These are usually performed by independent accountants or auditing firms. Results of the audit are summarized in an audit report that either provide an unqualified opinion on the financial statements or qualifications as to its fairness and accuracy. The audit opinion on the financial statements is usually included in the annual report. For other uses, see Audit (disambiguation). ...


There has been much legal debate over who an auditor is liable to. Since audit reports tend to be addressed to the current shareholders, it is commonly thought that they owe a legal duty of care to them. But this may not be the case as determined by common law precedent. In Canada, auditors are liable only to investors using a prospectus to buy shares in the primary market. In the United Kingdom, they have been held liable to potential investors when the auditor was aware of the potential investor and how they would use the information in the financial statements. Nowadays auditors tend to include in their report liability restricting language, discouraging anyone other than the addressees of their report from relying on it. Liability is an important issue: in the UK, for example, auditors have unlimited liability. Limited liability (LL) is liability that is limited to a partner or investors investment. ...


In the United States, especially in the post-Enron era there has been substantial concern about the accuracy of financial statements. Corporate officers (the chief executive officer (CEO) and chief financial officer (CFO)) are personally liable for attesting that financial statements "do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by th[e] report". Making or certifying misleading financial statements exposes the people involved to substantial civil and criminal liability. For example Bernie Ebbers (former CEO of WorldCom) was sentenced to 25 years in federal prison for allowing WorldCom's revenues to be overstated by $11 billion over five years. Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. ... Chief Executive redirects here. ... CFO redirects here. ... Bernard John Ebbers, also known as Bernie Ebbers, (born August 27, 1941) is a Canadian-born business man. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ...


Standards and regulations

Different countries have developed their own accounting principles over time, making international comparisons of companies difficult. To ensure uniformity and comparability between financial statements prepared by different companies, a set of guidelines and rules are used. Commonly referred to as Generally Accepted Accounting Principles (GAAP), these set of guidelines provide the basis in the preparation of financial statements. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting, mainly used in the U.S.A.. It includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements. ...


Recently there has been a push towards standardizing accounting rules made by the International Accounting Standards Board ("IASB"). IASB develops International Financial Reporting Standards that have been adopted by Australia, Canada and the European Union (for publicly quoted companies only), are under consideration in South Africa and other countries. The United States Federal Accounting Standards Board has made a commitment to converge the U.S. GAAP and IFRS over time. <a href=>bad credit mortgages</a> <a href=>chase credit cards</a> <a href=>seo optimization</a> ... International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). ... International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). ... The Financial Accounting Standards Board is a major organization to develop Generally Accepted Accounting Principles in the United States (US GAAP) along with SEC, AICPA, and GASB. It was created in 1973 and replaced its predecessor, the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute...


Inclusion in annual reports

To entice new investors, most public companies assemble their financial statements on fine paper with pleasing graphics and photos in an annual report to shareholders, attempting to capture the excitement and culture of the organization in a "marketing brochure" of sorts. Usually the company's chief executive will write a letter to shareholders, describing management's performance and the company's financial highlights. An annual report is a document which a company presents at its Annual General Meeting for approval by its shareholders. ... A brochure is a flyer or other paper material distributed for the purposes of advertising. ...


In the United States, prior to the advent of the internet, the annual report is considered the most effective way for corporations to communicate with individual shareholders. Blue chip companies went to great expense to produce and mail out attractive annual reports to every shareholder. The annual report was often prepared in the style of a coffee table book. A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. ... Coffee table book on coffee table A coffee table book is a hardcover book that rests on a coffee table or similar surface in an area where guests sit and are entertained, thus inspiring conversation or alleviating boredom. ...


References

  1. ^ "Presentation of Financial Statements" Standard IAS 1, International Accounting Standards Board. Accessed 24 June 2007.
  2. ^ "The Framework for the Preparation and Presentation of Financial Statements" International Accounting Standards Board. Accessed 24 June 2007.
  3. ^ "The Framework for the Preparation and Presentation of Financial Statements" International Accounting Standards Board. Accessed 24 June 2007.

Image File history File links Question_book-3. ...

See also

Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Government financial reports are an important part of democracy ( or a constitutionally limited republic) but often not widely read or discussed. ...

External links


  Results from FactBites:
 
Personal financial statements. (includes related article) (3105 words)
Financial statements or tax returns of separate entities, such as a closely held business, a trust, or a profit-sharing or deferred compensation plan can be used as sources of information regarding the individual's interest in the entities.
The statement of financial condition is the basic personal financial statement that presents estimated current values of assets, amounts of liabilities, income taxes on the differences between the estimated current values of assets and amounts of liabilities and their tax bases, and net worth at a specified date.
When personal financial statements are prepared for one individual from a group of joint owners of assets, only that person's interest as a beneficial owner--determined under the property laws of the state having jurisdiction--should be included in personal financial statements.
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