How does information from financial reports
influence business decisions? Why is it important for business managers to understand
the information found on financial reports?|||Financial reports tells us whether a business is profitable, have enough cash to meet cash flow requirements, and if it is performing better or worse than before among other things. With cash flow for example knowing that you don鈥檛 have enough cash in the bank to meet the coming outflow of cash means a decision is to be made how to get cash into the bank. The business can mature a certificate of deposit earlier than expected or take a cash advance out from a credit card. The reports will also tell you whether the business can afford paying early withdrawal penalty or the 10% interest rate on the cash advance. Relationships among information on the report (key ratios) tell other things like your Return-on-Asset (ROA), inventory management, or if you are getting something back from what you spent to market your business.
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