Financial Information for Management



Essential Financial Information for Management

Introduction

To evaluate financial performance of companies, creditors and investors encounter various financial information which represents worth, position and cash inflows and outflows of the company. This information is also very crucial for management at all levels as through issuance of the financial statements, management can communicate with the third parties regarding the operations and achievements of the business. Different areas of performance are covered by the different financial statements. The aim of this paper is to provide the SAC Board of Directors and executive management team with essential financial information on the management of the SAC enterprise.

Discussion

As being the business financial analyst at SAC, duties which has been obligate is to provide Directors and the executive management team with the relevant financial statements which is essential to assist the company's management while making further expansions. The different financial statements and their purpose is to shows how the company generates money. In order words, it's all about the money coming in and going out the company along with the current standing of the companies (Pamela P., Frank J., 2011).

Hence, there are at least four statements which are essential for answering the questions of company situation based on financial basis which are

Balance sheet statements

Income statements

Statement of Cash flows

Statement of financial statement ratios

The items which are stated in Balance sheet are what SAC possesses and what it be obliged. In other words, it gives information on the company's assets or through which company is generating profits. The range is from physical items to inventory or equipments. They are further classified in intangible assets which are the company's trademark or patent or goodwill. The other side is the liabilities part which illustrate what owes by the company to others. Rent, suppliers, banks, creditors, employers' government and tax, there are all liabilities which company has to pay. For clear explanation, the following formula is helpful.

Assets: Liabilities + Shareholder's equity

Assets have to be equal with the sum of liabilities and the shareholders equity, as when assets or liabilities are acquired, both affect the worth of the company either in enhancing or reducing the value. This report is constructed at the end of a reporting period.

An income statement shows the operation of the company. This report gives a clear picture regarding amount earned by the company i.e. the net income over the accounting period. The value of net income is obtained through accumulations of the expenses and cost incurred for manufacturing the product. To conclude, income statement demonstrates the profit or losses of the company. Here, earning per share is calculated to give an idea regarding the return to the shareholders if company decided to distribute dividend. Earnings per share are determined through dividing total net income with number of shares outstanding. After determining the net income and EPS, the income tax is deducted which finally gives the result whether SAC has incurred net profit pr net loss (Thomas R., Henry, Wendy ...