ratio provide a --measure of a company performance and condition
Answers
Answer:
LEARNING OBJECTIVES
Identify the three main financial statements that companies generally submit
KEY TAKEAWAYS
Key Points
The income statement gives an account of what the company sold and spent in the year ( revenues and expenses ).
The balance sheet is a financial snapshot of the company’s assets and liabilities, and informs shareholders about its financial health.
The cash flow statement shows what came into and went out of the company in cash. It gives a better idea than the other two financial statements about how well the company can meet its cash obligations.
The Securities and Exchange Commission (SEC) regulates these financial statements. Companies must file extensive reports annually (known as a 10K ), as well as quarterly reports ( 10Q ).
A company may report its financials in a fiscal year that is different from the calendar year.
Key Terms
10Q: A quarterly report mandated by the United States federal Securities and Exchange Commission to be filed by publicly traded corporations.
generally accepted accounting principles: The standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements.
10K: An annual report, required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a public company’s performance.
Financial statements are records that outline the financial activities of a business, individual, or any other entity. Corporations report financial statements following Generally Accepted Accounting Principles ( GAAP ). The rules about how financial statements should be put together are set by the Financial Accounting Standards Board (FASB). Standardized rules ensure, to some extent, that a firm’s financial statements accurately represent the company’s financial status.
Ratio provides a relative measure of company performance and condition.
• We can use financial ratios to examine profitability, asset utilisation, inventories, and other assets, liabilities, and costs related to a company's finances.
• We can also use them to figure out how quickly people pay their bills, how long it takes a company to recoup its investment in new equipment, how much cash the company has compared to its debt, and how much profit it makes on every dollar it spends.
• A company can also use financial ratios to compare itself to other companies in the same industry.