3.20 : Using Financial Statement Information

Financial statements are written records that provide stakeholders with information on an organization's business activities and financial performance.

The primary financial statements that are required for decision making are the balance sheet, the income statement, and the cash flow statement.

Consider Sandra, a finance manager of Salt Corporation, a department store.

Sandra can use the financial statements to seek funds from potential lenders like banks, which can be utilized to expand or upgrade the department store.

Financial statements will also give Sandra a clear picture of the profits that Salt Corporation generates in the year

Sandra can decide from the statements whether to distribute profits as dividends to the shareholders or retain the profits to be further invested in the business.

Sandra can disclose the statements to potential investors, increasing transparency and trust. Trust can encourage investors to invest in the company by purchasing shares in the stock market.

Financial statements will also help Sandra to make informed decisions for the store's growth.