Fundamentals of Financial Management, Third Edition

18

Financial Statements

OBJECTIVES

To acquaint the readers with financial statements and the purpose for which they are prepared

To explain how an income statement is prepared

To show how a balance sheet is prepared

To describe the sources and uses of funds that form the basis for a funds-flow statement

To delineate the sources and uses of cash for preparing a cash-flow statement

Financial statements that present an organised collection of financial data, consistence with accounting norms, form the basis of financial analysis and planning. They help convey an understanding of certain very significant aspects of a firm’s finances, e.g., the various inflows and outflows of cash ultimately resulting in profits (or losses) during a particular ...