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Balance sheet constitutes a vital part of a company's final accounts that provides valuable information to internal and external users of financial statements. A balance sheet can be produced and presented on an annual or periodic basis. Balance sheet is not used as source of information related to day-to-day transactions…
It can also help managers to establish policies and strategies for the future.
This paper provides information about the importance of balance sheet and its uses for investors and management. It also provides an insight into the ratio analysis that could be done on the basis of information obtained from balance sheet. The paper shows calculation and analysis of ratios from the balance sheet of Palaron Plc so as to understand the usefulness of information presented in the balance sheet for investors.
Balance sheet plays a vital role in depicting the financial position of a company. It further shows whether an investor should invest in a particular company or not. A company's balance sheet also shows the strengths and weaknesses of a company. A company through its balance sheet portrays its financial position to the investors that it is a reliable company that possesses prosperous prospect and chances to grow. It also reflects whatever the goals have been set by the company will definitely be accomplished and delivered to the investors in the shape of cash or stock dividends. Birts also says that "the company must demonstrate its ability to trade for some time into future so that customers have confidence that it will be able to meet its commitments to them" (2001, p36). ...
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