Financial statement of a company - Essay Example

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Financial statement of a company

When this is done, the company has the knowledge of whether it has the liquidity to settle any debts that are due. The financial statements are also important in determining the costs of productions and the selling rates. When this is done, then the company is able to determine the profit margins that it makes. This helps develop the land increase and the bottom line. The analysis of financial statements is also important in keeping track of the inventory. This is very important in knowing if you have enough inventories that can be used to meet all the sales that are projected. Knowing the total liabilities that are in relation to the total equity of the business is very important (Robinson, 2009). This is known as the debt to equity ratio and is very important to each and every business. With a well planned and organized financial statement, an analysis can be done to know the debt-to-equity ratio. This is one of the great benefits of financial statements. Last but not least, a well organized financial statement has the ability to help an organization keep track of its improvements over time. When financial statements are compared overtime, it can be used to spot any changes that affect the organization both positively and negatively. A financial statement is one of the most important tools that organizations and small businesses use in order to realize significant changes that are in their organization. ...Show more

Summary

The research, planning and analysis of the financial statement of a company have a lot of benefit on the company. With a well organized plan and analysis, the company is able to keep track of its debtors and the analysis of the current ratio…
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