Since the employees require stability of tenure, they would not want a situation whereby the company doesn’t guarantee their jobs. The management is interested in this information since it would want to know its performance and review the weak points which need to be improved. The information is important to the management since it needs to provide periodic reports on the company’s performance. The potential investors need to evaluate whether the company is a good investment opportunity. Without proper information, the company could not be an attractive investment opportunity since it would lack transparency. Eventually creditors and suppliers need to evaluate the financial information in order to find out whether this company is credit worth. They would want to find out whether they could extend credit facilities in terms of money or goods. Question 2: Most of the financial information is usually published in journals, magazines and annual reports. Some of these reports are usually given during the annual general meeting to the shareholders and potential investors. Other sources which can be utilized could include online sources such as the company websites or online journals and magazines such as www.businessweekly.com. This information evaluates in a snapshot the riskiness of the company and whether it is advisable to invest in it. other analysts normally obtain this information in order to try and predict the future performance of the company either in the short or in the long term. Question 7: Ratio analysis was formulated to basically try and provide a synopsis of the company’s performance. Ratio analysis is obtained through dividing very important to the organization since it basically evaluates the company’s financial statements and provides recommendations. Ratio analysis also tries to judge a company’s efficiency while locating the weaknesses and coming up with action plans. Ratios form a very important tool in terms of comparing different companies and their performance in the industry. Question 15: Managers tend to utilize the market value ratios in different manners such as in instances of potential mergers and acquisitions. These market value ratios such as price earnings ratio and book value ratio normally impact on the performance of management. When these ratios are high, it indicates that the management is doing a good job while if they are low then the converse is true. The managers could affect these ratios in an indirect manner since these ratios depend on the perception of investors. Much of the impact on these ratios is usually from the outside world hence the impact of managers could be curtailed and limited. Question 16: This is not usually possible since the management usually have the ability to manipulate financial information to portray the company’s image in good light. The seriousness of this practice usually ranges from interpreting accounting rules favorably to a situation of fraud. The function of auditors is to try as much as possible to prevent this practice leading to mis stated financial information. In some circumstances, the auditors are the ones who perpetrate this practice by deceiving the public in order to gain fame with the management of the client firm. QUESTION 25 (A) PROTEK COMPANY LIMITED COMMON SIZE INCOME
Cash flow analysis and financial statements Question 1: A company’s financial information is usually utilized by various people and who are impacted directly or indirectly by this information. Some of the main users of this kind of information include the management, employees, creditors, potential investors, suppliers and customers…
This Statement is significant because it provides the framework to use the future cash flows in accounting measurements at initial recognition or fresh-start measurements. It describes the principles that are helpful in using the present value especially when the future cash flows and their timings are uncertain.
l accounting are the two basic accounting methods used to track the income and expense of a business concern. Precisely speaking, these two methods are only different from each other on the timing they are debited or credited to the business accounts. In cash accounting method, the income is considered when cash is received and expense is considered when cash is paid in real.
For each statement, indicate the term described, or answer "None" if the statement does not correctly describe any of the terms. Debt ratio _ (a) The percentage of total assets financed by creditors. The formula for the debt ratio is total debt/total assets (BPP 2009) Return on assets _ (b) A measure of the effectiveness with which management utilizes a company's resources, regardless of how those resources are financed.
The following discussion entails the significance of all three approaches: A. ACCOUNTING EARNINGS VERSUS CASH FLOWS One of the most fundamental approaches in understanding and analyzing the return on investments is to see whether ROI should be analyzed based on accounting earnings or cash flows.
This may, however, be due to the typical characteristics of the industry and higher R&D requirements, which may be industry specific (Peterson & Fabozzi, 2012). Apart from this, mature companies have stable cash flows whereas the firms such as Apple, which are experiencing
g is never a subsidiary of financial accounting rather it is the process that includes tax accounting, financial accounting, information analysis and other accounting activities.
Statements of cash flows are important for managerial and financial accounting. This statement
When business became more complex, then double-entry accounting was implemented; firstly, to avoid mistakes in the monies, but, also, to detect and prevent any fraudulent activity that may be occurring. Today there is far more elements within business
A cash flow statement attempts to answer how a firm used and generated cash during the fiscal period (Harrison, Horngren, & Thomas, 2013). This information is critical to users as it helps them access a particular firm’s ability to
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