Question

If you were an investor, or considering to become one, which financial statement would you want to look at? Do you consider the Cash Flow Statement significant?

Answer 1

As an Investor, the following Financial Statements are of prime importance:

a. Balance Sheet : It shows the Assets, Liabilities and Capital Position on a certain date. It shows the Net Worth, amount of Long Term and Short term Debt, Fixed Assets,Working Capital and such other vital information relating to the Entity.

b. Statement of Profit and Loss: It shows the Revenue, Other Income, Expenses and Net Profit earned by the entity.

It is pertinent to note that apart from above two financial statement, Cash Flow Statement is also important indicator of financial health of the company. It shows the inflows and outflows of the company from various activities such as operating, investing and financing and shows the Cash Position of the entity. Thus an investor may get to know about the Investment made by the company or finance raised by the company through Cash Flow Statement.

It is upon investor to consider the importance of various financial information available with him/her.