Question

Understanding financial statements are key to the success of any organization. How do financial statements relate to the mission statement of an organization? Explain how they aid in the mission of the organization.

Answer 1

Mission Statement is short statement which describes the short term and long term goal of the organization. It includes their target customer type, type of operation, Geographical region of operation etc.

Financial includes the Balance Sheet, Income Statement, Cash Flow Statement. Here Income Statement shows profit and loss for current year, cash flow statement shows the current cash position of the company and Balance sheet reflects the debt position, cash position , current asset, current liability, equity position cumulatively for the years company is existing.

Hence, income statement and cash flow statement shows whether company is able to achieve it's short term goal to the mission statement.

Whereas balance sheet shows where company is standing till date from inception i.e.long term goal of the company. In short, mission statement describes what the company want to achieve and financial statements shows what the organization has achieved so far.