Regarding financial statements, which one of these three are the most important

Question

Regarding financial statements, which one of these three are the most important for a person who reads financial statements:
-income statement -cash flow statement -balance sheets
The response be a minimum of 200 words.Please include source(s).


Regarding financial statements, which one of these three are the most important for a person who reads financial statements:
-income statement -cash flow statement -balance sheets
The response be a minimum of 200 words.Please include source(s).


Regarding financial statements, which one of these three are the most important for a person who reads financial statements:
-income statement -cash flow statement -balance sheets
The response be a minimum of 200 words.Please include source(s).

Explanation / Answer

Each type of financial statement provide different type of information. and each financial statement has its own importance.

Information contains in income statement is mention below:

1. Value of sales or total revenue

2. Gross margin which shows income from operation after paying all direct expenses

3. Indirect expenses which includes, Salary of employee, office expenses, consulting expenses.

4. EBITDA shows income from operation after paying all direct expenses and other office expenses.

5. Operating income which shows net income before tax available for stockholder and bondholder.

6. Net income net income after tax available for stockholder

7. all the income statement is made on accrual basis that is one transaction is done the value of transaction is mention is statement even cash is not transferred.

Information contains in Balance Sheet is mention below:

1. Total value of fixed assets available with company for future operation

2. Total value of current assets available with company for this year operation. Current assets include Account receivables, Inventory, Cash and cash equivalent, short term investment.

3. Value of long term debt and proportion total debt of total assets.

4. Value of current liabilities which includes, Note payable, Account payables.

5. Value of working capital which is calculated by current assets minus current liabilities.

6. Value of equity and retained earnings available for shareholders.

Information contains in Cash flows statement is mention below:

1. Total cash company receive during year from primary operation of business.

2. Change in working capital over period of time

3. Cash receive by company from sell of fixed assets and cash dispense by company for purchase of new machinery or other fixed assets.

4. Cash receive by company from issue of new capital in term of debt, equity or preferred stock.

5. Repayment of existing debt to debt holder.

6. Interest or dividend payment.

7. Value of net cash available in company at end of period,

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