Running Head: APPLICATION OF FINANCIAL STATEMENT
Assignment # 1: Application of Financial Statement
June 12, 2011
Application of Financial Statement
Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life.
A balance sheet provides a snapshot of the company’s financial condition at a specific period in time by summarizing the assets, liabilities and shareholders' equity. It proves to be a reliable source for showing what the company owns and owes, as well as the amount invested by the shareholders. This same concept can be used for personal assets and expenses. A personal balance sheet could be compiled to give an individual an idea of where they stand financially. On this balance sheet one could list their assets, such as cash in checking and savings accounts, common stock, and maybe real estate. They could also list their liabilities or expenses, such as mortgage loans or credit card debts. The difference between the listed assets and liabilities would show one’s personal net worth.
Using the same concept selected above, discuss how a business manager may benefit from an understanding of this statement.
Business managers can benefit from understanding a balance sheet=========
Discuss how your understanding of the balance sheet and income statement may be applied to your current or future position.
Currently I work for a defense contractor. This business has been hit hard by government budget cuts and insourcing. Since I am a Contract Administrator my salary is an indirect charge or expense. So, when my company loses a significant amount of contracts or sees reductions in the amount of direct charge dollars, then they have to start reducing the amount of indirect expenses they have in order to survive. Thankfully, I have not been affected by this yet, but others that I work with have.
If I were able to see a balance sheet for my company I may be able to...