Wk 4, hcs 577: financial plan
When creating a plan for your finances, financial statements can provide valuable insights. The statements provide insight on different aspects of a business and help to understand its present performance as well as potential. The balance sheet is particularly important as this outlines a company’s assets, liabilities, and shareholders’ equity; providing insight into the overall financial stability. This allows for decision-makers identify where money could be better allocated or areas of growth to maximise profits.
The income statement presents details on the company’s sales and expenses which helps inform decisions about pricing strategy or cost reduction initiatives. Cash flow statements provide information about how much money has been earned and spent over time. This allows for informed budgeting decisions and financial needs.
A pro forma statement can be particularly helpful in evaluating future scenarios relating to capital investment or purchase decisions, as the costs and revenue associated with these initiatives are predicted. These four statements can be used to make strategic decisions for the business.
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