Financial Statements: For a publicly traded company, what are the most important

Question

Financial Statements: For a publicly traded company, what are the most important financial statements and why?

Choose a small business other than that given in the scenario or that chosen by another classmate: In a small business of your choice, what accounting/financial statements would be most crucial to running your day to day business and why? Make sure you specify what type of business you would choose.

Scenario: If your best friend came to you and said that their business was doing poorly and you looked over their business and saw the information (in the scenario below), what would you advise him or her and explain why.

Scenario: Your best friend works for an In-Home Health Provider Company (IHHPC) in Palm Beach County, Florida. Your friend comes to you and explains that the In-Home Health Provider Co. wants to expand the next year to Broward County and Miami County. Your friend explains the company is dealing with a cash flow problem and if it is not figured out over the next six months the IHHPC will not meet the asset requirement for the expansion loan.

IHHPC Revenue:

80% private pay patients.

10% Health insurance.

10% Long Term Care Insurance Policy.

Process at IHHPC: Your friend explains this is how the IHHPC works. A patient would call in and request a nurse for eight hours, seven days a week, starting the next day. The company would send the nurse the next day, then bill the patient on a weekly cycle. The IHHPC would mail a statement to the patient at the end of the first week of service. Â By the time the patient would get around to writing a check, and mailing it back in to the IHHPC, sometimes the company would not receive payment for six to eight weeks. The company would be paying the nurse weekly although not receiving payment for services yet.

What would you advise him or her and explain why.

Any help would be a blessing!! Thank you in advance

Explanation / Answer

for public companies the important financial statements are income statement, profit and loss statement and balance sheet. income statement shows the sources of income to a particular period, we can compare them with past also. profits and loss account statement says about at the end either the firm gets profits or losses. it reflects for a particular period. and balance sheet shows the assets and liabilities on a particular date. if the values are increased it can assume that they are growing and vice versa.

to a small firm the regular expenditures and incomes are more important. for it the income and expenditure statements are more crucial and based one aspect we can design the other. a best example is local Pizza selling point. here the activities can be carries based on the income and the revenues. regualr activites are more important here, and to get more profits they need to prepare in a different way always.

in this condition one of the way to pay regular payments is, put some amount as a fund for only payments to the people and dont use the fund for any other purpose. and the second way is plan to recieve income in such a way that to get atleast one income for week.

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