The World is emerging with corporations and businesses. The companies are being transparent about their financing to attract the investors and new stakeholders. As marketing via the only word of mouth is not enough in today’s era of logic, people require proof to trust any industry. Financial report about the corporate is the way to present the financial operation within the company. Here we will cover all the necessary aspects of financial statement with corporate financial statements homework answers.
First of all, it is important to understand what the corporate financial statement is?
It is a record which provides the information about the financial condition of the business in the form of a formal report. These statements include both short and long-term financial situation about the company. In a nutshell, corporate financial statements represent how financially sound the firm is.
Which reports can be considered in the corporate financial statement?
Bellow, there are four aspects stated which are included in a corporate financial report.
- A statement of financial position
- A statement of comprehensive income
- A statement of retained earning
- A statement cash flows
Corporate financial statements homework answers will cover about what the each aspect is.
- A statement of financial position
It is commonly known as a balance sheet of the firm. It represents the data about the equity. Besides, it gives the information about assets and liabilities.
- A statement of comprehensive income
It is also referred as income statement or profit loss statement. More often it is labelled as revenue and expense report.
- A statement of retained earning
It is equity statement which shows the ownership of stakeholders within the company.
- A statement of cash flow
All the activities of the enterprise related to money come in this report. The operation, investment and financial activity of money are declared in this.
Corporate financial statements homework answers has explained the basis of corporate financial reports. Now let’s understand what should be considered while writing the financial reports of any firm.
- Corporate financial statements are the dominant way to convey a message of the significant financial health of the business in the industry. Investors look for detailed information in those reports in a way that it can give insights of the firm. So, financial reports should be generated with transparency.
- The important aspect of financial reporting is, it helps to predict the future. Let’s understand it with the real life example.
For example, there is a company, ABC. Financial experts have prepared the graphs of the company success based on how much selling they have made in past five years.
The business of company ABC does well for sometimes, and there is a decrease in sell other time. Company ABC looks into its five years of business financial reports; all the cash in’s and cash out’s of cash flow. After careful assessment of those reports, they made a decision that raw material purchased in summer had the most price.
Now, they make the decision to keep their stock full before summer and spend less money on raw materials. So, the future aspect of business depends upon how the all four characters are written in present time.
- The creditors and stakeholders are mainly people of the company. As the value of a company depends on how the company is doing with the money, the company should always take care of how the finances are coming and where they are going. Corporate financial statements homework answers explains that the competitive strength and economic power always depends on such scenarios.
But, even if the company does well and does not consider the economic aspect of it, fails in the market.
- Moreover, financial experts of the company make some models and take necessary decisions based on the financial reports of corporate.
For example, Company ABC makes machines which are huge in size and complicated to create. Based on how much maintenance and cost of operational activities reported in the cash flow statement, they are deciding the next one year purchase of materials. So, the decision making an aspect of the company also depends upon the reports which are generated every day.
- Revenue generation the important part of the firm, should also be considered an important aspect of the corporate financial reports, suggests corporate financial statements homework answers. Every company has specified accounting time periods in which the revenue should be reported in the financial reports.
- Moreover, it may be tedious to note down every number people come across with the management of cash. But, it is vital to report the cash flow for the legal aspect of the firm.
For example, company XYZ is doing an export of their products in several countries. Now the government of the enterprise XYZ does not allow the exportation of the product above an absolute bar. The company must not exceed that limit. To stay legalised in the business company must have records of operation activity and financial reports of it.
Understanding the financial report is an essential skill. Not everyone can interpret the information which is written in the form of data. So, interpreting numbers of financial reports are like connecting the dots of the present financial condition of company and prediction of future.
Corporate financial statements homework answers covers the most important aspects of corporate financial reports. Hope it is helpful to understand the topic overall so that it can be used in most practical way for the betterment of the company.