The Financial Statements
When we were students, our class performance was reflected in our classcards as our teacher recorded our grades in different subjects/projects or exams. Either we got an A, B or C.
Businesses are also evaluated according to their performance for a period and their financial condition as of a given date.
Because it is the management teams ’ responsibility to adopt and implement strategies that spell the success or doom of a business entity, the performance of these management people is likewise assessed in the results of the operations which are reported in the financial statements.
There are two basic financial statements; the balance sheet and the income statement,however a cash flow statement is also prepared to show the sources and the uses of cash during a month, a quarter or a year.
You might ask, what is the importance of these financial statements if you are a marketing manager or VP for Marketing or Sales Manager?
The first item in the income statement is sales or revenues from service activities or products sold. The increase or decrease in the figures presented in the statement for a particular period as compared to the past year or previous years assesses how the marketing people did their job in generating revenues for the company.
The costs and operating expenses are responsibilities of the managers of the cost centers.
The Human Resources will always have to work within the budget for recruitment, selection, training, benefits management and other expenses related to personnel management.
If it is a manufacturing concern, the materials, the labor and the overhead are primary concerns of the manufacturing executives. These costs have a lot to do with profitability, competitiveness with rival products in the market and the feasibility of a project.
The marketing people can not just dictate the sales price nor draw the commission schemes for dealers, agents, distributors without conferring with the manufacturing department.
In short, the figures that the financial statements particularly the income
statement guide these executives on the strategic decisions they make.
Module 1 Financial Satements Part 1
business,financial statements ,balance sheet ,statement
posted by cathy at 8:53 AM
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