Details of Financial Statements and Ratios (graded)
For this discussion, we will talk about the primary financial statements published by a corporation, the various classifications used in a balance sheet, the relationships among different financial statements, and how the numbers from the different financial statements are analyzed together to evaluate the financial position and performance of a company. The information being discussed here will be found partly in Chapter 1 and mostly in Chapter 2.
In order to keep our discussion organized, we will go according to the following plan.
- Balance sheet (We will begin with this statement.)
- Income statement (We will begin this discussion on Wednesday morning.)
- Statement of retained earnings (We will begin this discussion on Thursday night.)
- Statement of cash flows (We will begin this discussion on Friday night.)
- Earnings per share, current ratio, and debt to total assets (We will begin this discussion on Saturday night.)
Let’s begin by asking the question: What is the purpose of a balance sheet? What information does it provide?