Answer the following question:
1. How do you plan to use financial statements in your projected financial statement analysis? Provide rationale for your approach. – 150+ words and at least one reference.
2. Respond to this answer – At least 100+ words and at least one reference: Financial statements flesh-out a profile and track record as to how a business is functioning across the board. With it, an analysis can be made which will provide a basis for strategic decisions that need to be made to eliminate waste, increase profitability, and insure the continued success of the business in the community in which it is operating. In any decisions the cash flow is of importance for potential investments or if the company is in the red, indicate a need to secure a loan or other financing to keep the business afloat until it is profiting as expected. A balance sheet further helps in targeting problems and solutions as well as projecting the company’s performance in the foreseeable future. Stakeholders need to be apprised of the financial health of the company on a regular basis since they are invested in the outcome.
3. Respond to this answer – At least 100+ words and at least one reference: Per David & David (2017) projected financial statement analysis is a technique that allows an organization to examine the expected results of strategies being implemented. Having a projected income statement and balance sheet allows an organization to compute projected financial ratios under various scenarios. When compared to prior years and to industry averages, financial ratios provide valuable insights into the feasibility of various strategy-implementation approaches.