1. What financial statements are of particular importance to investors and why?

Investors are initially interested in seeing the income statement because it will show revenue figures
and net asset increases. These figures are derived from sales, so this statement will provide
investors with a view of how well the company is doing. Expenses are also reported on the income
statement which will provide investors with an idea of how the company is prioritizing its growth
and what it is spending money on. Other statements that investors will view are the balance sheet
and cash flow statement for the same reasons.

2. What financial statements and the ratios associated with them are of particular importance to
the creditors of the firm and why?

Creditors are also interested in the income statement primarily but also the balance sheet. Although
they look at the same statements, creditors are looking for different information. They want to
insure that the company has the ability to repay the money they are considering lending and insure
that the company will be prosperous in the future.

3. What measurements of both risk and return (the important concerns of management) can be
found in the financial statements and what ratio's provide that information?

Return on investments, return on assets, and debt to equity are all found in the financial statements
and are measurements of both risk and return.

4. Does GAAP provide only one means to provide financial information to the readers of the
financial statements or are there several that are allowed based on the financial status of the
firm?

GAAP provides the guidelines that organizations follow to provide information to readers but not only
by one means. The type of statements provided and the time frames in which these reports are given
are determined more so by the size of the company than by GAAP.