Accounting and financial statements

Conclusion

The analysis can be concluded in terms that financial statements depict the degree to which economic resources of a company have increased or diminished during a specific period of time. Future performance of a company is also predicted through financial statements and shareholders usually compare financial statements of two or more companies before taking important investment decisions. There are different types of financial statements like balance sheet, income statement, cash flow statement and statement of change in owner’s equity. Forecasts provides space to the power of the preparer of financial statements, incrementing the issue of evaluation degree of subjectivity of the values which anticipate – in an assumed approach – the dynamics linked with the business environment and organization. The degree of reliability of financial statements is not reflected by the degree of subjectivity. In order to make effective investment decisions, investors can use ratio analysis for comparing financial statements of two or more companies.