Thursday, December 15, 2011

How does information from financial reports influence business decisions?

why is important for business managers to understand the information found on financial reports?|||Basically so you can know how healthy your company is. If your trying to get a loan, the person who is loaning you money is going to be concerned with how much money you other people already. They can find that out from the balance sheet. Then they can look at the statement of cash flows and see how much money is coming in from the normal business operations and see if that is adequate to meet the loan. The income statement can tell you lots of things about where your spending your money and where you are making it. It might give you insights into places where you can cut out cost. The amount of information you can gleam from the financial statements is endless, and what you want to get out of it mainly depends on what you want to find out. |||- To understand how the company is performing

- To make changes to the company strategies and business plans especially if the financial performance is poor

- To redirect resources to areas that need it

- To determine what aspects of the operations need to be finetuned or improved

- To determine if the current strategic plans and business plans are working

- To determine if the marketing and sales strategies are working, and make revisions if they are not

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