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Task 1.1 Financial Information And Limitations

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TASK 1
1.1 Financial information and limitations
A company’s financial statements offer numerous financial information that investors and lenders used to evaluate a company’s financial overall performance. Financial statements are also crucial to a company’s managers because by publishing financial statements, management can communicate with involved outside events about its accomplishment running the company. Different financial statements focus on specific areas of financial performances. The general cause of the financial statements is to provide information about the outcomes of operations, financial role, and cash flows of a company. This information is used by the readers of financial statements to make decisions concerning the allocation …show more content…

In other words, this is a company's capability of generating income from its operations.
• Cash flow is described as a company's operating cash flow minus capital expenses. This is the money that can be used to pay dividends, buy back inventory, pay off debt and enlarge the business.
• Financial stability is described in terms of its ability to facilitate and enhance financial procedures, manage risks, and absorb shocks. Moreover, financial stability is taken into consideration a continuum: changeable over time and consistent with multiple mixtures of the constituent factors of finance.
• A cost projection will normally recall both internal information such as historic profits and value information, and estimates of the improvement of external market elements, providing expected figures similarly to projections of the general financial situation of the company in the future.
Purpose and requirement for financial records
Financial records maintained by most organizations include a statement of retained profits and cash flow, income statements and the organization's balance sheet and tax returns. Keeping its financial records well organized is one of the key elements in a successful

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