Basic FinanceThe primary purpose of studying finance is to gain an understanding of the financial performance of a business, corporation, or industry. When looking at a company's financial performance, decisions about many things can be made by many different actors. Companies are rated by several agencies that look at financials and growth potential. Fitch's ratings are a good example of this. My employer has a Fitch A++ rating. This high rating allows a nonprofit corporation to borrow money at lower interest rates. In a publicly traded company, which has shareholders, the main concern is keeping them happy. Shareholders infuse capital into companies they believe in (usually based on financial performance). When a company is considered to have low financial risk, the public will not be in a hurry to buy its shares. So who is influenced by finance? Shareholders, as mentioned above, are the focus of attention in publicly traded companies. But they're not the only ones thinking about financials. The CEO, CFO, and any other “C” positions are responsible for reporting to the board on the company's financial performance. Management is responsible for creating and maintaining both the capital and operating budgets. Employees are expected to maintain certain productivity standards. Customers are also influenced by finances. Consider gas prices and how increased production costs are passed on to the consumer. When examining a company's finances, there are essentially four elements to consider: the income statement, the price-to-earnings ratio, the balance sheet, and the cash flow statement. flows, (Block, 2005). The income statement is a tool used to measure profitability over a specific period of time, i.e. quarterly, annual. The income statement evaluates the cost of producing goods or services and the money earned as a result of selling those goods/services. Gross profit and net profit are two key characteristics to consider. The price-earnings ratio measures the relative valuation of earnings (Block, 2005). This is a way to compare your company's stock earnings to those of other companies both inside and outside your industry. This ratio is influenced by many variables such as marketability, sales growth, and a company's debt structure.