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Financial Statements: How and Why Managers Use Them

Updated: Nov 16, 2020

Simon Says . . . . Use financial statements to your benefit!

Effective managers typically do their due diligence by continually improving their skills through professional resource exchange, taking online courses, reading books or publications and listening to relevant podcast.

Financial statements are not to be overlooked as it relates to management tools. Financial statements can be used by managers to track performance, budgets, and other metrics, and as tools to make decisions, motivate teams, and maintain a big-picture mindset. The three financial statements mangers should know how to both read and analyze include: the balance sheet, income statement and cash flow statement. Below are descriptions of each: -- The balance sheet provides a snapshot of a company’s financial health for a given period. It lists the assets, liabilities, and equity line by line for the period so that stakeholders can understand the breakdown.

-- The income statement, also known as the profit and loss statement, or P&L, gives an overview of the income and expenses during a set period. Typically presented annually or quarterly, the income statement allows businesses to compare trends in income and expenses over time.

-- The cash flow statement details the inflows and outflows of cash for a specific period. Broken into operating activities, investing activities, and financing activities, the cash flow statement demonstrates the business’s ability to operate in both the short and long term. These documents, when analyzed together, can provide an integrated view of the your organization's financial health. If you used correctly, they can help mangers identify previous pitfalls to build strategies for more successful futures. Click Links below for Resources: - SCHEDULE AN ADVISORY CONSULTATION - SAS VALUES AND SERVICES - 5 WAYS MANAGERS CAN USE FINANCE TO MAKE BETTER DECISIONS Up Next: 3 Ways Managers Can Use Financial Statements

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