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Financial ratio - Essay Example

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Undergraduate
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Finance & Accounting
Pages 2 (502 words)
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A business form common in Europe and Canada, a limited company is a business entity wherein an investor's obligations for the debt of the company is limited to the amount he invested in it (Limited Company n.d.)…

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Financial ratio

A business form common in Europe and Canada, a limited company is a business entity wherein an investor's obligations for the debt of the company is limited to the amount he invested in it (Limited Company n.d.) Some of its accounting and finance features include:Limited debt of investors - As stated in the definition, one of its financial features is shareholders' limited debt. Unlike sole proprietorship wherein an entrepreneur's debt could be more than what he initially invested, investors' accountability of the company debt is limited to the amount he invested.Annual disclosure of financial activities - Limited companies are required by law to submit annual accounting and financial reports to the government. This is to regulate its fiduciary activities and to protect the interests of its current and prospective investors (Limited Company 2006).In the United States, corporations are required to submit their financial reports to the United States Securities and Exchange Commission for the regulation of their financial activities (The Investor's Advocate 2006). In terms of financial reporting, the Federal Accounting Standards Advisory Board is tasked to promulgate accounting standards in the federal government, whereas the Financial Accounting Standards Board makes sure that the financial accounting and reporting standards are enforced.2. A Cash Flow Statement shows the cash amounts and equivalents flowing in and out of a company. ...
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