Financial reporting is the process of communicating a company's financial performance to external stakeholders. It involves the preparation and dissemination of various financial statements, such as income statements, balance sheets, cash flow statements, and related disclosures.
At its core, financial reporting provides important information about a company's financial health that investors and other stakeholders need to make informed decisions. Financial reporting helps in assessing the profitability, efficiency ratio and stability of an organization over a specific period.
Financial reporting serves many purposes. For one thing, it provides information to stockholders.\ Without access to accurate information on financial reports,\ stockholders cannot evaluate how well their investment has performed or make knowledgeable decisions about buying or selling shares.
Additionally; good quality Information allows managers at all levels to make more informed business decision which will have positive impact on revenue generation thereby improving overall performance。
There are three primary financial statements: Income Statement,Balance Sheet,Cash Flow Statement,. An income statement shows Net Income (also called profit), while a balance sheet shows Assets minus Liabilities resulting in Equity position at any point in time.\ Finally Cash Flow Statements provide\ valuable insights into \cash inflow and outflow by breaking down both Operating Activities cash flows as well financing activities.
An income statement provides details about an organization’s total revenues generated during a particular fiscal year after taking care of all expenses including taxes,stake holder profits etc.
A Balance sheet gives detailed picture organization assets created from investments made with liabilities being expenditures required for these assets.Either equity would be sufficient enough remaining otherwise firm will require additional fundraising activity via loan or issuing forth formal equity positions.
Cash flow statements enlists operating involvements ,financing activities,and investing interests for different time periods to display business cash inflow outflow state and its effect on liquidity.
Financial analysis helps in evaluating the financial performance of a company by analyzing its financial statements. It uses ratios, metrics, and other analytical tools to assess a company's profitability, liquidity, solvency and stability for business expansion etc.
Ratio analysis checks how interlinked various items are as it measures overall efficiency and effectiveness of different activities within organization.It gives us a holistic view of firm performance from insurance investor perspective
Trends help distinguish patterns over long time frames while SWOT analysis (Strengths, Weaknesses Opportunities and Threats) enables realistic appraisal environment surrounding an organization highlighting potential opportunities for improvement .
1)"Analyzing Financial Statements: Techniques for Monitoring Business Performance" by Bellam.
2)"The Intelligent Investor" - Graham Benjamin
3)"How To Read A Balance Sheet : For Understanding Income Statements,Cash Flows And Internal Controls''- Cheng Anne Carpenter
4)"Corporate Finance: Theory and Practice” Ross Westerfield Jordan.
5)” Rich Dad’s Guide All Time Cash Flows Robert Kiyosaki”.
