Chapter 13
Ten Things You Should Know About Business Financial Statements
In This Chapter
Recognizing the indispensability of financial statements
Being cool with estimates
Living in multiple realities: Economic reality and cash flow reality
Dressing statements for success
Financial statements, which are one of the main products of the accounting system of a business, serve two broad purposes:
They help managers manage the profit performance, cash flows, and financial condition of a business.
They serve as a pipeline of information to business lenders and investors. Without this financial information, lenders would balk at loaning money to a business and investors would refuse to invest their hard-earned money in a business.
In short, financial statements are essential in managing a business and in raising the capital a business needs to operate.