Why does the company report more than one year of data in its financial statement?

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Originally Posted by nmetwally

Why does the company report more than one year of data in its financial statement?

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There are different types of financial statements, balance sheets, income statements and different degrees of financial stmts depending on if they are simply compiled, reviewed, and audited. Compiled are less reliable and are not verified by an accounting professional such as a CPA. Reviewed are less reliable than fully audited stmts and audited stmts have been reviewed and verified as to accuracy by a CPA and are the most reliable. Now to your question which I can only answer generally since I am not sure which type of financial stmt you are asking about, financial stmts generally give one an idea of a companies finances as of a particular point in time or in the case of an income statement, over a defined stated period. So basically the person or whomever is wanting info on a company's finances might want to see a trend, i.e. did the company lose/make money over the last year and then over the last few years. Is net worth, working capital growing or declining. Simply put to give one a better picture of what's going on.

Why does a company report information more than once a year?

Some reasons being timeliness and relevance.

If I tell you once in March how I am doing, that is OK. But, then you have to go another full year before you get any indication on the company.

If you want to invest in a company, do you want out of date financial information to rely on?

If you want to loan to a company, do you want out of date information on how they are doing?

Information becomes less relevant as time goes on. The fact that you make $435,000 in fiscal 2004, is less and less relevant as time passes on.