The income statement, the balance sheet, changes in equity and the cash flow statement provide explicit 'bottom line' indicators, however is of little significance unless provided additional context. These contexts are measured by financial ratios. Interpretation of such ratios must follow calculation.

Financial analysis techniques can be used to show:

• areas of operation where performance is deteriorating
• areas of operation where performance is below that of companies operating in the same area of business activity

Different methods used to fund organisations and different funding structures affect the financial viability of organisations. Corporate governance has particular importance in both private and public sector organisations particular due to various accounting scandals. There is emerging use of public-private partnerships to provide improved public infrastructure without excessive use of debt finance.

Under the Corporations Law and AASB 101 Presentation of Financial Statements, any business organisation that is a reporting entity must include the following items in its general-purpose financial reports:

• the director's report
• the director's statement
• a balance sheet (statement of financial position)
• an income statement (statement of financial performance or profit and loss statement)
• a statement of changes in equity
• a cash flow statement

The four main concepts that underlie financial statements are:

1. Accounting entities and reporting entities
2. The accounting equation
3. Accrual accounting
4. Profit

Over the past two decades the accounting profession has developed an internationally agreed description of the concepts in financial reporting.

Financial management is the process of planning, controlling and evaluating financial decisions. The assumed goal is the maximisation of shareholder wealth in for-profit organisations and deliver nominated services in a not-for-profit. Business organisations are defined as sole properietorship, partnership, companies (public and proprietary) and can be distinguished by their liability, limited, unlimited and, in the case of mining companies, no liability.