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In the majority of contemporary business organizations and financial institutions income statements are generally used to provide a prime report of the respective earnings and this is mainly targeting the company or institution investors. It essential provides a criterion for reporting entities in strategic organizational settings leading to either loss or profits, while taking into account key inputs in terms of financial support and investments from the involved stakeholders (Edith & Chalton, 2005). Therefore, the aim of financial statements is to portray resource potential in terms of assets acquisition and financial performance variables.
In regard to annual reports, the major aim of a balance sheet is to provide investors with a quick preview of the level of performance of a company in terms of the involved financial variables. It elementally displays the respective assets of the company, liabilities, and other equity arrangements. This usually involves an assessment of a company or a firm’s liquidity and assets base focusing on the critical financial parameters at a specific point in time (Edith & Chalton, 2005). The components involved usually involve current asset, fixed asset, deferred tax liabilities, and share values as at the time of assessment.
Statement of Cash Flows
This elementally aims at expressing the changes taking place in accounts showed by the presented balance sheet and includes a thorough analysis of the cash equivalents, financial operating factors and other key investment options (Edith & Chalton, 2005). Similarly, it displays a firm’s liquidity status over a relative period focusing on specific intervals or duration. In addition, it provides factors regarding solvency issues, evaluates the relative changes taking place in the asset base, and a platform for performing comparison indices of major performing companies in the specific financial reviews. This takes contributes greatly to the relative annual reports provision. Which is basic in a firm or business setting.
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