Economically, financial statements are official records of an organization that illustrates its day-to-day operating activities as well as its financial position. Such information is always recorded and presented in a structured way and that can be easily read and understood. Additionally, the purpose of financial statement entail providing solid information concerning the financial position of the business, its performance and financial changes which is useful to several users. These statements are anticipated to be well understood by a person who has sensible knowledge about an organization and its economic activities (SEC.gov | Beginners' Guide to Financial Statement, 2019).

            There are four financial statements that are always used together with management discussions and other analyses.  The first one is a balance sheet which used for reporting the owner or owners’ equity, possession or assets and accountabilities or liabilities of the organization. The second one is the income statement that is used for detailing the profits, everyday expenditures, and revenue that the company could have made or incurred. It also offers information concerning the company’s daily activities for instance, sales. The third one is the equity statement which is used for reporting the company’s equity change.  The last one is the cash flow statement which is used for reporting the inflow and outflow cash into the company from various activities, especially financing and investments (SEC.gov | Beginners' Guide to Financial Statement, 2019).

            Nevertheless, such information is useful to various users in enabling them make sound economic decisions. For instance, managers and owners use this information for making crucial decisions affecting continued operations of the business. Workers also use these reports to make solve matter related to their work, for instance, promotion, salary increment, and so on. Potential investors use them to evaluate the feasibility of investing in a particular business. Lastly, financial institutions also use them in determining whether to grant the business a loan or not.

                                                           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                            Reference

SEC.gov | Beginners' Guide to Financial Statement. (2019). Retrieved 5 August 2019, from https://www.sec.gov/reportspubs/investor-publications/investorpubsbegfinstmtguidehtm.html