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In: Finance

What can financial reports be used for? (100–150 words)

What can financial reports be used for? (100–150 words)

Solutions

Expert Solution

Financial Report- Financial report is the formal reports(balance sheet, Profit and loss account etc) that the company is issued to public.
Financial reports is a important tool for decision making whether to invest in the company or not. Financial statements include balance sheet, P&L account, notes to accounts or futures plans the company is to be prepared for.
Financial statement shows (B/Sheet) whether the company is solvent or not. IF the company financial statement is audited and the auditor give the unqualified report it will show the strength of the company that the financial statement are prepared as per the accounting standards.
Financial statements shows what steps are taken by the company to increase the wealth of the shareholders.
By comparing the previous financial reports( eg-2017-2018 & 2019) whether the company has done the work which was stated in the previous years.
Financial statement helps in understand, whether the management is good for the company.
Management discussion analysis(MDA) is a key points to be consider while reading the financial reports, in this points it will show the all future plans of the company, and any mishappening appear in the past all the declaration was given in that points by management.

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