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Financial Reporting

Financial reporting is the identification, measurement, and communication of the financial information about an economic entity.

Annual Report

The annual report is the most important report corporations issue to stockholders. It contains two types of information, a narrative presented as a letter from the chairman describes operations over the past year and financial statement that presents information in standardized accounting format. These include the Balance Sheet, Income Statement, the Comprehensive Income Statement, the Statement of Cash Flows, and the Statement of Retained Earnings.

Quarterly Report

Companies also release less comprehensive reports every three months, as required by the SEC, also called 10-Q.

Balance Sheet

The balance sheet (also known as the Statement of Financial Position and the Statement of Financial Condition) summarizes the assets, liabilities and equity at a specific point in time. The balance sheet gives investors an idea of what an entity owns and owes as well as the amount invested by owners.

The balance sheet helps compute the rates of return, evaluate the capital structure, ascertain risk and cash flows, as well as, analyze the businesses: Liquidity, Solvency, and Financial Flexibility

Income Statement

The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. It is the report that measures the success of a company's operations for a given period of time. It is used to determine profitability, investment value, and creditworthiness of a business. It also helps predict the amounts, timing, and uncertainty of future cash flows.

Statement of Comprehensive Income

The statement of comprehensive income reports all income and expenses recognized during a period, except those resulting from dividends and shareholder investments. Other comprehensive income items include: foreign currency valuation adjustments, pension liability adjustment, and unrealized gains and losses on investments.

Statement of Cash Flows

A cash flow statement is a financial report that describes the sources of a company's cash, detailing cash inflows and outflows over a specified time period. It is useful in assessing the amounts, timing, and uncertainty of cash flows.

Statement of Retained Earnings

The statement of retained earnings reports changes in the retained earnings accounting during a reporting period. The statement begins with the beginning balance in the retained earnings account, and then adds or subtracts items such as profits and dividend payments to arrive at the ending retained earnings.