Chapter 13

Ten Things You Should Know About Business Financial Statements

In This Chapter

arrow Recognizing the indispensability of financial statements

arrow Being cool with estimates

arrow Living in multiple realities: Economic reality and cash flow reality

arrow Dressing statements for success

Financial statements, which are one of the main products of the accounting system of a business, serve two broad purposes:

check.png They help managers manage the profit performance, cash flows, and financial condition of a business.

check.png 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.

Internal financial statements used ...

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