[chevelle71]

I received a question: "If you could have access to only one of the primary financial
statements, which would it be and why?" I am having trouble coming up with solid reasons one is better than another. I am pretty sure it comes down to the Income statement and the statement of cash flows. The question is also up to interpretation as to what you plan on doing with the information you get from the statements. Any help would be appreciated. Thanks guys.

[ebaines]

I would say the balance sheet. It tells you whether the company is fundamentally healthy or not - debt/equity ratio, liquidity, shareholder equity, accounts receivable, to name a few.

[morgaine300]

I think the point of the question must just be to make you think, and think about what the use of each statement is. I'd consider there's not much right or wrong answer. For certain individuals, there might be one statement that is more important than another. But overall, they are all important. It would depend on the use. As long as you come up with a valid reason, then I think it would have to be correct. If I were looking at statements as an investor, I would be ignorant to pick out one statement and just look at that.

So try to think from different people's perspectives and see what you think would be important to that type of person. Start inside the company. What about management. What do think is most important to them. Now, the bank or other creditors. And then, investors. Think of the info they're going to want to use. Then just pick one that is the easiest for you to understand and the one you think you can come up with the best reasoning for, and go with it. If they have any sense, they want to look at everything, but try to find what would seem to be more important than something else.

Just try to think about it a while and see what you come up with.