Statements

HA401 : The Class : Finance : Revenues : Statements

Key Financial Statements

PROFIT AND LOSS STATEMENTS

The P & L is probably the most important financial statement in evaluating the operating performance of a business or enterprise. The P & L measures the financial results for a certain time period, usually a month, quarter or year. It contains detailed financial information in terms of dollars and percentages for current year actual results, last years actual and this years budget. This is the primary statement used to evaluate the operations of a business. The P & L for a business is generally made up of a consolidated P & L and then department P & L’s. A specific manager has responsibility for each department and the General Manager for the overall business operations and results. These departments as well as the consolidated P & L need to be evaluated each month.

BALANCE SHEETS OR A & L STATEMENT

The balance sheet, also called the A & L Statement (Assets and Liabilities) shows the value of a business at any specific point in time, end of month or end of year. It is composed of Assets — what the company owns, Liabilities — what the company owes, and Owner Equity — who owns the company. This statement is primarily used by bankers, investors and owners in determining the value of a business.

CASH FLOW STATEMENT

The Cash Flow Statement, also called the Source and Use of Funds Statement, shows the status of cash in business operations. It is made up of bank statements that show the activity in the Cash account. It shows departments or areas that are generating cash and those that are using cash. It is primarily used to show the liquidity of a business.

Once you have completed this module you should:

Go on to Reading 10: Summary
or
Go back to Topic 1: Revenues

E-mail Lloyd Shelton at Lloyd.Shelton@nau.edu
or call (928) 527-7518