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Business LibreTexts

15.5: Financial Controls

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  • Learning Objectives

    1. Understand the nature of financial controls.
    2. Know how a balance sheet works.
    3. Know how an income profit and loss statement works.
    4. See the sources of cash flow.

    As we discussed in the previous section, financial controls are a key element of organizational success and survival. There are three basic financial reports that all managers need to understand and interpret to manage their businesses successfully: (1) the balance sheet, (2) the income/profit and loss (P&L) statement, and (3) the cash flow statement. These three reports are often referred to collectively as “the financials.” Banks often require a projection of these statements to obtain financing.

    Figure 15.6


    Financial controls tell you when good organizational performance is reflected in good financial outcomes.

    stevepb – Pixabay – CC0 public domain.