Major components of key financial statements

The components of Financial Statements are the building blocks that together form the Financial Statements and help understand the business’s financial health. And consists of an Income Statement, Balance Sheet, Cash Flow Statement, and Shareholders’ Equity Statement. Each component serves a purpose and helps understand the business’s financial affairs in a summarized fashion.

The components of Financial Statements

The components of Financial Statements

Most financial management plans will break them down into four elements commonly recognized in financial management. These four elements are planning, controlling, organizing & directing, and decision making. With a structure and plan that follows this, a business may find that it isn’t as overwhelming as it seems.
Typically, the primary goal of financial management is profit maximization. Profit maximization is the process of assessing and utilizing available resources to their fullest potential to maximize profits. This has the greatest benefit for company shareholders hoping for the highest possible return on their investment

Objectives:

  1. Describe the major components of key financial statements required to develop ratio analysis.
  2. Explain various ratio calculations and their meaning.
  3. Analyze how financial statement data affects a firm’s growth.
  4. Demonstrate time value of money calculations, including present and future values of both single payments and annuities.
  5. Determine how interest rates affect financial decisions.

Assessments

Topic 2 DQ 1
Assessment Description

To live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account today and contribute the same amount of money on every birthday up to and including your 65th birthday. Using TVM principles, how much must you set aside each year to make sure that you hit your target goal if the interest rate is 5%? What flaws might exist in your calculations, and what variables could lead to different outcomes? What actions could you take ensure you reach your target goal?

Topic 2 DQ 2

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