FIN/380

What is a financial statement?

How can they help the financial manager?

What are the types of financial statements?

Statement of Financial PositionWhat it revealsWhy it is important

Statement of ActivitiesContent of the statementImportance of the statement

Statement of Cash FlowsWhat it showsWhy it matters

ExpensesoProgram ServiceoPublic Awareness

and EducationoFund RaisingoLosses on

Contributions Received

Revenues and Gainso Contributionso Government Grantso Donations-in-kindo Other Income

GAAP Guidelineso SAS 69

IRS Form 990oRevenue StatementoBalance SheetoStatement of Functional ExpensesoExpenses set apart by individual program serviceoSupport schedule that features revenue sources

Management team and board need sound financial data to Assess liquidity Set and monitor desired liquidity levelBalance cash inflows and outflows over the near future and

longer-term future

• Internal financial statementsEnable the measurement of financial position through ratio

analysis Utilize statements of financial positions and activities to

make liquidity, funding and operating ratio analyses

Financial statements are instrumental to internal users Aid in the accurate representation of financial situation Support the fulfillment of the company’s mission and provide

proof of accountabilityAssist in the facilitation of necessary changes by management

Two financial statements that are valuable to the management Statement of Financial Position/Balance Sheet Statement of Activity/Statement of Net Revenues

The statement of cash flows seems to be of greatest importance It is crucial for management to know the amounts of cash

inflows/outflows to secure future operations

Benefits internal decision making processIs useful in the development of internal

reportsInternal metrics Summary reports Conduct of financial ratio analysis Audit reportsTarget liquidity levelBalancing of cash inflows and outflowsVariance analysis

Influences internal control process

Statement of Cash FlowsUsed in cash flow projection

Statement of Activities and Statement of Financial PositionUsed in the computation of financial ratiosUsed for variance analysis

Statement of Financial Position & Statement of Cash FlowsUsed in the development of reports on target

liquidity levels

Zietlow, Hankin, Seidner (2007) “Chapter 6: Understanding Accounting Basics and Financial Statements. ______________from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx#ch06lev1sec3