Learn something new every day More Info... by email
Company financials is term used to describe a company’s financial accounting statements. Companies prepare financial statements so they have a historical record of financial performance for their business. Publicly traded companies may need to release these financial statements to the general public and investors. Common financial statements include the income statement, balance sheet and statement of cash flows. While these are the official financial statements for a company, managers may also use other specialized financial reports to make decisions regarding business operations.
The income statement contains all information relating to the sales revenue, cost of goods sold, and expenses. The sales revenue portion includes all sales made to individuals and businesses, along with any sales discounts given to these groups purchasing goods or services. Sales discounts lower the amount of sales generated by a company. The next section of the income statement, cost of goods sold, many not be included on every company’s income statement. Cost of goods may only relate to companies selling physical items that have an accounting cost attributed to them. Expenses represent any money spent by the company to generate the sales listed on the income statement.
The balance sheet is the next financial statement included in the company financials. The balance sheet lists all assets owned by the company, liabilities owed to outside individuals, vendors, or suppliers, and the owned or retained equity reinvested into the company’s operations. The balance sheet is an important part of the company’s financials. It shows the amount of economic wealth generated by the company through the increase of physical and intangible assets over a long period of time.
The statement of cash flows is a financial statement that it is mostly used under the accrual accounting method for company financials. The accrual accounting method records financial transactions as they occur, regardless of cash changing hands between parties involved in the transaction. Because of this system, many companies do not accurately track cash on their income or balance sheet company financials. The statement of cash flows lists all activities that have generated or expanded cash during a particular time period. Companies use this information to ensure they have enough cash on hand to pay for the delay needs business operations.
Company financials are usually created for a specific time period. Most financials are prepared and released on a monthly or annual basis. The annual financial statement is usually an aggregate total for each monthly statement prepared by the company’s accounting department. Publicly traded companies often list their financial statements in the annual and quarterly reports, along with any management explanations relating to the financial statements.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!