The best way to identify costs of a project or product would be to analyze available information from various financial reports and previous cost analyses. Once a project’s costs have been identified and categorized, a cost analysis is crucial for managing costs and maximizing profits. To perform a cost analysis, one would gather all pertinent financial records and associated information. Steps for this sort of analysis include adding up all direct costs for the program, allocating indirect costs, calculating depreciation of assets, and identifying and factoring in hidden costs. From there, a manager can make conclusions based off his/her findings. 4. Why is it important to know the different types of financial statements? Briefly describe the two main financial statements used for financial ratio analysis. It’s important for a manager to know and understand the different types of financial statements because detailed accounting and oversight helps a company avoid preventable losses. The two main financial statements used for financial ratio analysis are the balance sheet and the income statement. The balance sheet is a report of a company's financial worth in terms of book value, with that worth broken down into assets, liabilities, and shareholders’ equity.
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