Question

After reading about the three main financial statements in your textbook, consider how reading these statements could help you in your job. No matter what your position in the company is, you should be able to find some relevance between the information you can glean from the statements and information that would be useful to you in your work. Give at least three examples and explain how you can use the information to improve your effectiveness and/or efficiency in your current position. If you are not currently working, give three examples of information you would look for on the public financial statements of a company you might consider applying to for a job. Explain why this information would be useful in making your decision whether or not to work at a particular organization.

Answer 1

The information that I would look for in the financial statements of a company I might consider applying to for a job are:

1. ​The income statements of multiple periods to ascertain profitability of the organisation, and to chart an approximate prediction of growth in order to evaluate the growth prospects of employees of the organisation.
2. The current assets and current liabilities, to ascertain the company's ability to cover short term obligations with its short term assets, which helps to ascertain its financial solvency. A company's ability to cover its short term obligations weighs on its consequent ability to pay its employees, and if I am to be one among the employees, this affects my interests.
3. I would analyse the cash flow statement, to analyse liquidity. There have bveen several instances of perfectly profitable ventures that have failed due to lack of liquid cash, and subsequent failure in paying its obligations. A sinking ship would drag down all the employees along with it, and hence it is important to understand the liquidity of the company before applying for a job there.