EBK CFIN
5th Edition
ISBN: 9781305888036
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 2, Problem 1PROB
Summary Introduction
To determine: What financial information must be shared with people who invest in publicly traded companies and which financial statement provides the best information
Expert Solution & Answer
Explanation of Solution
Firms share annual reports with their shareholders which provide two types of information:
Discussion of Operations which contains results of operating activities in the past year and discusses new developments in the company that may impact future operations
Basic financial statements comprising the
balance sheet , the income statement, the cashflow statement, and the statement ofretained earnings . These statements together provide insights into the operating activities and the financial position of the firm. Detailed information is provided for the previous 2 years and key statistics for the previous 5 to 10 years along with historic summaries.
A cashflow statement provides the best idea about the financial performance and financial position of the firm as it gives information of how funds were generated and how they were used during the financial period.
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