62.8k views
2 votes
If I were stranded on a desert island, only had 1 statement and I wanted to review the overall health of a company - which statement would I use and why?

a. Cash flow statement
b. Income statement
c. Balance sheet
d. Statement of retained earnings

User Muudscope
by
8.0k points

1 Answer

2 votes

Final answer:

The best statement to use to review the overall health of a company would be the balance sheet, as it provides a snapshot of the company's financial position at a specific point in time.

Step-by-step explanation:

If you were stranded on a desert island with only one statement and wanted to review the overall health of a company, the best statement to use would be the balance sheet. The balance sheet provides a snapshot of a company's financial position at a specific point in time, including its assets, liabilities, and owners' equity. It can help you understand the company's financial stability, liquidity, and solvency.

The cash flow statement shows the cash inflows and outflows of a company, which can be useful for assessing its liquidity and ability to generate cash. However, it doesn't provide a comprehensive view of the company's overall financial health.

The income statement shows a company's revenue, expenses, and net income or loss for a specific period of time. It reflects the company's profitability, but it doesn't provide information about its assets, liabilities, or owners' equity.

The statement of retained earnings shows the changes in a company's retained earnings over a specific period of time. It is useful for understanding how much of the company's profits have been reinvested into the business, but it doesn't provide a complete picture of the company's financial health.

User Sorin Lica
by
8.8k points

No related questions found