Overview
Please respond to the following post. Ensure to use APA 6TH edition with references. These are 2 separate posts and require 2 separate answers.
Laura's post
"The financial statements are very important documents that tell a lot about a company’s financial situation and performance over time. They enable the owners, managers, investors, and creditors to base their decisions on reliable information and to judge the company’s overall condition (Label, 2013). The income statement lists the gains and losses, which are the profits and also the expenses. The balance sheet shows the company’s overall picture of what it owns, what it owes, and the shareholders’ equity, which gives an idea of whether the company is financially strong enough to give money back and also to stay in the market. The cash flow statement reveals all money activities coming in and going out related to operating, investing, and financing. (Label, 2013; Lendio, 2024; Investopedia, 2015; Inkle, 2024).
The financial statements are the documents on which every business relies heavily, as they are the means through which the business goes public with its dealings, trust, admittance of investors, and the whole business monopoly supported by planning. They also play a crucial role in revealing the financial strengths and weaknesses.
References Investopedia. (2015). Why do shareholders need financial statements? https://www.investopedia.com/ask/answers/032615/why-do-shareholders-need-financial-statements.asp
Label, W. A. (2013). Accounting for non-accountants: The fast and easy way to learn the basics (3rd ed.). Sourcebooks. Lendio. (2024). The importance and purpose of financial statements. https://www.lendio.com/guides/financial-statements-importance Inkle. (2024). Comprehensive guide on financial statements and their importance in business. https://www.inkle.io/blog/importance-of-financial-statements."
Naomi's post
"Metrics are vital tools for analyzing business performance. Financial metrics serve as Key Performance Indicators that help gauge a company’s progress toward its goals. According to Wayne Label (2018), these measurements reveal a business's actual performance and financial health. Although entrepreneurs use metrics for many commendable purposes, selecting the right one is essential for success. Metrics enable managers and employees to make decisions and take actions they believe will best help them achieve their goals. If chosen carefully, these metrics guide managers and employees in making sound decisions and taking appropriate actions that help the firm maximize long-term profits (Hauser & Katz, 1998). Proverbs 21:20 (KJV) says, “There is treasure to be desired and oil in the dwelling of the wise; But a foolish man spendeth it up,” contrasting the wise person, who saves and manages resources wisely, with the foolish person, who wastes them.
When an enterprise's primary goal is to create value, it is essential to have the means to monitor, estimate, and evaluate the value-creation activities. Based on both theory and practice, it is recommended to assess an enterprise's value and its changes by using various indicators (Tamulevičienė, & Androniceanu, 2020). The key measurement systems include revenues, expenses, profits, cash flow, assets, liabilities, and owners’ equity. These metrics offer a comprehensive view of how money flows through the business and whether it is generating or losing value (2018). These financial measures enable entrepreneurs to identify trends, detect problems early, assess opportunities, control expenses, and make strategic decisions that promote stability and support long-term growth.
References
Hauser, J., & Katz, G. (1998). Metrics: you are what you measure!. European Management Journal, 16(5), 517-528.
Label, W. A. (2018). Accounting for non-accountants: The fast and easy way to learn the basics. Naperville, IL: Sourcebooks.
Tamulevičienė, D., & Androniceanu, A. (2020). Selection of the indicators to measure an enterprise's value and its changes in the controlling system for medium-sized enterprises. Entrepreneurship and sustainability issues., 7(3), 1440-1458."