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Essay sample - organization's financial statements
Finance & Accounting
Pages 3 (753 words)
Organization’s financial statements Organization’s financial statements The use of financial analysis as a technique for developing effective organizational decisions is quite common in markets worldwide. However, the value of financial analysis is depended on the ability of those involved to understand the actual role of financial analysis as a critical organizational tool…
In this way, the success of financial analysis process is depended on the use of accurate information, as incorporated in financial statements of each organization. Due to its role in the development of effective organizational decisions, the financial analysis has been extensively explored in the literature. Emphasis has been given to the different missions that financial analysis can achieve, as a decision making tool. It seems that the need for eliminating risks in regard to investment decisions has been the key reason for the expansion of financial analysis process (Lee et al. 2009, p.2). Indeed, it has been proved that financial analysis is an excellent tool for checking whether the existent capital of a firm is adequate for responding to the needs of a particular investment, either in the short or the long term (Lee et al. 2009, p.2). From a similar point of view Norman has argued that financial analysis is quite important for minimizing risks related to the potential participation of a firm in a stock exchange market (Norman 2011). Maitah et al. (2012) refer to the use of financial statement analysis in banks as a tool for identifying effective ‘investment and lending decisions’ (Maitah 2012, p.107). ...
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