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Explain why Listed Companies Produce Financial Statements for Externals Users and how These are Regulated in the UK
Finance & Accounting
Pages 8 (2008 words)
Explain why listed companies produce financial statements for external users and how these are regulated in the UK. Over the years, the preparation and the issuance of financial statements have become important processes for many companies around the world.
According to Tracy, J. (2009), these users are interested in “four basic financial aspects of a business”. These four are the “sales revenue and profit or loss performance”, the “financial condition...in particular the solvency prospects of the company, the capital issued by the company and “any other claims that directly or indirectly participate in the profit of the business” and the sources and uses of the company’s cash flows (Tracy, 2009). Financial statements are especially critical for listed or public companies. These are the companies that are in the centre of the capital market of any country. These capital markets are the source of capital resources, which are needed by any company, in particular, and any economy, in general, to efficiently produce goods and services for the consumption of the public. Thus, the capital market should be effective in order to produce sufficient capital resources. In order to be effective; the participants (i.e., investors) of the capital market must be able to arrive at good investment decisions and must be able to obtain “useful information” from which they can base these good decisions. ...
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