As an investor, I would be much interested in specific kind of information is the financial statements. In the balance sheet, I would be interested in the current assets and current liabilities. These will help me in calculating the current ratio. The higher the ratio the better since a higher ratio means the company has many current assets as compared to current liabilities (Spurga, 2004). In the income statement, I would be interested in the earnings per share (EPS)). This shows how much money the shareholders would receive for each share if the company distributed all its net income for a specific period. EPS is calculated by dividing the total net income with the total outstanding shares.

The cash flow statements report the cash inflows as well as the outflows. An investor would be interested in the free cash flow. The free cash flow is the excess cash produced by the company. An investor would be interested in the net income, depreciation, changes in working capital and the capital expenditures which are used to calculate the free cash flow. The statement of owner’s equity shows any changes that affect capital. An investor would be interested in the net income or loss and the withdrawals.

The balance sheet basically shows the assets and liabilities of a company. It is important in that it gives an insight into the financial strengths and capabilities of the business (Spurga, 2004). By properly analyzing the balance sheet, the users will know the worth of the company easily.  The balance sheet also shows whether a company is operating under a surplus or deficit. It also shows the management which debts to collects and which ones are to paid.

Reference

Spurga, C. R. (2004). Balance sheet basics: financial management for non-financial managers. New York: Penguin Group

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