What information is contained in the balance sheet, income statement, and statement of cash flows?
Investors and other stakeholders in the firm need regular financial information to help them monitor the firm’s progress. Accountants summarize this information in a balance sheet, income statement, and statement of cash flows. The balance sheet provides a snapshot of the firm’s assets and liabilities. The assets consist of current assets that can be rapidly turned into cash and fixed assets such as plant and machinery. The liabilities consist of current liabilities that are due for payment within a year and long-term debts. The difference between the assets and the liabilities represents the amount of the shareholders’ equity. The income statement measures the profitability of the company during the year. It shows the difference between revenues and expenses. The statement of cash flows measures the sources and uses of cash during the year. The change in the company’s cash balance is the difference between sources and uses. What is the difference between market and book value? It is i
