Importance of maintaining accurate financial statements Name Institution Importance of Maintaining Accurate Financial Statements Introduction Financial statement is a record of activities of a business entity or persons. Financial statement is kept to gage the performance of the business and for auditing purposes…
The paper will explore why accurate financial statements are important for outside business interests Customers Customers are external parties that deal with the company by purchasing its products and services and are therefore interested in the financial statement of a company that needs to be accurate. Customers would be interested in the accurate financial statement for them to be able to know how the company spends its funds and manages its debts. Accurate statement of financial position and statement of comprehensive income will show the customers how the company is performing in terms of the profits the company makes relative to the debts it incurs, or the amount the company spends on its marketing strategies in comparison with operations (Horngren, Harrison & Oliver, 2012). A customer would be interested in the financial statement for them to be able to gage whether the company is profitable and would continue as a going concern. If the financial statement reflects that the company may go under receivership, the customer may get a good picture and strategies on where they will get their products in case the business collapses a\s reflected in the financial statement. ...
Customers require that the companies they deal with handle themselves responsively toward the environment and giving back to the society through corporate social responsibility. Therefore, accurate financial statement should contain corporate social responsibility that customers have become increasingly looking for in the company. This is because through financial statement customers would be able to know whether their preferred companies measure the overheads, returns, and their impacts on corporate responsibility initiative (Williams & Williams, 2006). Customer is always interested in knowing the plans of the management. This can be known only through an accurate financial statement that contains the section of executive manager’s discussions and analysis of what had happen in the past and the future prospects. The management analysis is also considered as one way by which customers who does not understand other parts of the financial statement can gain some important information pertaining to company’s plans. Shareholders The shareholders of a company would also be interested in an accurate financial statement so that they can be able to determine whether their investments are being utilized effectively. This would be reflected in the Statement of financial position. Through financial statement, shareholders would be able to know whether the company is profitable and is likely to pay dividends in the near future or not (Horngren, Harrison & Oliver, 2012). Creditors Creditors just like the customers use financial statements in a number of ways. They use the statement of financial position to know the company’s ...
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The Home Depot is the world largest home improvement store. The firm offers its customers a wide variety of products selection at reasonable prices. Managers often make assessment of their company to the general public. It is important for potential investor to be able to understand finance in order to test the validity of the claim of the managers of public companies.
It should therefore be given the necessary attention. Basing on the position and nature of the blood stain, a lot of information can be gathered concerning the conditions of the crime. Violent crimes normally involve Bloodshed and Bloodstain Pattern Analysts (BPA) who play a major role in the investigation.
There are those transactions that are initiated by the organization towards other stakeholders to that organization, while others are initiated by the stakeholders’ towards the organization. Either way, the transactions entails either bringing some money to the organization, or taking away some money from the organization, for the purpose of paying up some expenditure it has incurred.
This financial statement allows analysis between different companies or time periods within a company to be done easily. The figures on the common size account are conveyed as percentages of a statement component like the returns. While most organizations do not report their statements in joint size, it is beneficial to calculate if you aim to evaluate two or more firms of differing dimensions against each other.
Consolidation of Financial Statements Introduction The acquisition method is predominantly applied to consolidation of financial statement from 2009. Prior to that Purchase Method of consolidation was in vogue. Pooling of interest method was adopted for consolidation prior to 2002.
These companies have provided their owners with adequate returns, with Coles-Myers' ROE playing around 15-19% within the period, while Woolworths's ROE in 2005 is 37%, 32% in 2006 and 27% in 2007. These high ROE figures are effect of financial leverage that are employed by both companies: both companies utilize debt in more than 50% of their financing.
The financial statements are divided into four categories. Firstly, the balance sheet is a financial statement which gives the summary of the assets, liabilities and the stockholder’s equity of a firm at a moment of time,
The additional information if included in the main report would cloud the data in it and hence decrease the efficiency of the report. But the same additional information in the form of footnotes can lead to better clarity and understanding of the financial statement
Financial ratios are tools that help to interpret a company’s financial planning, and its performance during the existence of the business. It allows the company to compare own activities with respect to previous years as well as among
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