Durango Manufacturing Company is progressive and poised for a successful future. To best maximize company revenue and position in the industry, it should consider increasing revenue by 10% in the next five years. As a consultant, our firm encourages the organization and CEO to consider methods of implementation to develop the company going forward. Several items must be taken care of to change revenue per business year. These steps include checking on our labor productivity and also department development which affects revenue collection. If taken seriously and implementation is successful, these strategies will help to achieve the desired goal of attaining 10% revenue in the next five years.
One must understand that the integral core of
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Stakeholders include but are not limited to employees, investors, and lenders. Therefore, to have a well-informed and well-rounded opinion, it helps to have accurate and up to date financial statements and ratio distribution of the company’s revenue. With the statements, it not only shows the current position of the company but gives insight to determine the best decisions in the running of the company. In regards to lenders, financial statements are the antithesis of the lending criteria used to calculate any monies the company may or may not receive. This calculation is important in estimating the average amount of money that they can lend the organization, and the amount can be paid after a certain period taking into account the rate of interests (Cummings & Worley, 2009).
Employees should also be presented with the financial statements of the company so that they can realize the fruits of their efforts. With knowledge come great rewards. The impact of knowing the financial status of the company provides incentives for employee performance; work hard and get a bonus. Also, the offering of financial statement will show the employees are not separate from the work that has help to mold and maintain operations but instead include them in what is going on to offer suggestions for improvement. This makes the workers to feel appreciated and increase their efforts in helping the
Collection of information is essential to support the major functions and activities of the organisation. To ascertain this it is essential to have regular reports of the organisation and to do this you need regular financial reports and audits. A true vision of the organisation will give any management a better understanding of their situation and will thus help them to make a good viable decision.
The main purpose of the financial statements is to provide creditors and investors with a summary of a business financial activity. All statements are prepared at certain times throughout the year. The balance sheet reports liabilities, assets, and owner equity of the company. The income statement matches incurred expenses during a period of generated revenue. The statement of retained earnings reports retained earnings from net loss and net incomes from
Creditors take the biggest risk when lending money due to the fact that they have all the skin in the game and are taking a calculated risk. The review of the three aforementioned financial statements seem to be the clearest way to come to a conclusion about whether or not a creditor should lend a company money.
11. Investors and creditors are particularly interested in this financial statement because it tells them what is happening to the company’s most important resource?
When you’re looking at the income statement, you can get information about profitability for a particular period. This is also called the profit and loss statement. The income statement is composed of both income and expenses. This statement can be used to deduct expenses from income and report either a net profit or net loss for that period. This statement will deduct all expenses from income and then report your net profit or net loss for that period. This will allow the business owner to determine if the business is bringing in a good amount of revenue to make a profit. The cash flow statement shows the movement in cash and balance over period. The cash flow can vary depending on the operating activities, investing and financing activities. This statement provides one business owner with insight to the company’s liquidity which is vital to the growth of the business. Reinvesting in business is very important, looking at the statement of retained earnings will tell a business owner how much were reinvested in the company. After profitable period, every big business has to give some of its profits to stockholders, and keep the rest amount as retained earnings. Out of all statements, retaining statement is important to companies that sells stocks to the public. This statement can also provide you with assets and liabilities information. These informations can be used to assess the financial health of your business. The results of a balance sheet will help the business owners to show the risk of liquidity and credit. Looking at these information you can measure trends and relationships to show where in the areas you can improve. These can also be compared to similar companies to show how the business measures up to leading competitors (Ali, 2010). In summary, the financial statements can provide a business owner
The balance sheet (BS) is significant to a business due to its ability to provide a “snapshot” of a company’s assets and liabilities at any given time. This financial document is a cursory representation of a business’s health. The use of comparative BS whether it be yearly, quarterly, or monthly provides the interested parties a tool to observe trends that are positive, negative, or neutral to a company’s financial health (Finkler, Jones, and Koyner,2013) .
The financial perspective uses financial performance measures to determine whether the organization’s strategy and actions are profitable. An organization’s financial goals may be as simple as: to survive, to succeed, and to prosper. Survival can be measured by cash flow, success can be measured by growth in sales and income, and prosperity can be measured by increased market share and return on equity. Managers are encouraged to use financial measures like these to demonstrate their financial position to shareholders. (Kaplan and Norton
Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;
Financial statement measures the financial performance, liquidity and strength of the firm, it is important
Financial statements are a very useful tool for individuals interested in the organization. Investors use the information to determine if it a wise decision to put their money into the organization. Investors need to determine if the organization has been successful and profitable and will continue to be successful and profitable. Creditors use the financial statements to determine the amount of credit that should be advanced to the organization. Employees generally do not look at the financial statements, but if a new executive was thinking of joining the organization, he or she may want to see the potential of the organization to make sure the investors are becoming a part of a successful organization. Management uses the financial statements on a monthly basis to determine which areas of the organization are profitable and which areas of the organization that needs to be discontinued or restructure to become more profitable.
have explained that the Financial statements provide asummarized view of the financial position and operations of a firm. Therefore, much can belearnt about a firm from a careful examination of its financial statements as invaluabledocuments / performance reports. The analysis of financial statements is, thus, an important aidto financial analysis.
For my final paper, the topic that I have chosen is how external stakeholders use financial information to make decisions in a company.
In any business operations, full financial disclosure refers to the provision of the necessary information about a company for better decision making by the people accustomed. It is the financial revelation of a given company. There are some financial disclosures in any business that ensure proper understanding of financial statements to the financial readers, or potential auditors. Examples are the annual financial reports and the financial declarations of the company. The annual financial reports of the enterprise are very useful since they discloses the revenues recognized in the business, and the accountability of the inventories plus the income taxes accounted for during that period of operation. Second, is the disclosure of this financial statements which gives the actual revelation of the company 's stock options, liabilities and the effects of foreign currencies?! This disclosure includes the company 's balance sheet of the year, income statements and also the cash statements flows of that year. This information gives a proper understanding of the financial status users about the effects of inflation and price change on property and inventories (Berger, 2011).
Investors will be interested in this because they will be able to decide whether or not it is worth it to buy shares of the company. Managers benefit from this statement because they are able to see whether the company is making money and whether the company’s performance is improving. They can also use this to decide how they may improve the out put of the company, what changes need to be made. Auditors are able to use the statement of cash flows to see exactly what a company did with their money. They are able to dissect where the company received money from, where it invested its money, and what operations the company took part in. So the statement of cash flows is useful for many different people who are involved in a corporation.
The financial statements are very useful to all this group of user. Explain each of them;