Financial Reporting

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Financial Reporting

Financial Reporting


The purpose of financial statement analysis is to determine the most effective ways of achieving profitability, and the main tasks are to analyze the profitability and financial risk assessment company. Financial statements are prepared by firms based on existing national standards and international standards developed by international economic organizations, and for the countries - EU members - are also EU standards. Firms with foreign subsidiaries use the consolidated financial statements prepared on the basis of information from all related companies, and submitted as a single reporting company.

Financial Statement Analysis carried out primarily by financial managers of the firm to identify and resolve problems in the current activities of the firm, to develop and make optimal decisions on improving the efficiency of supply operations, valuable use of available resources, improving pay and strengthening the stability of the financial situation of the company also to ensure that the planned financial targets and commitments of the firm to creditors and investors.

Financial Statement Analysis also carried out by auditors to audit accounts and determine the correct tax. The auditors based on the analysis made an official conclusion on the financial status of the firm, which included in the annual report submitted by the firm's top management meeting of shareholders. (Walker, 2004, 82)Discussion and Analysis

The financial statements of companies listed on the Stock Exchange, analyzed by experts, analysts, these exchanges, since the state of affairs of the company depends on the price of its stock exchange. Large institutional investors - banks, insurance companies, and various specialized funds - provide a staff of professional analysts who constantly monitor changes, in performance in the financial interest of their firms. Banks, service companies, are also constantly aware of her financial affairs and carefully analyze the balance sheet, the profit performance and other reporting documents. They monitor the state of the creditworthiness of the firm, the availability of means at its disposal to guarantee the repayment by the due date of loans and credits. (Van Riper, 1994, 46)

This information is interested in entrepreneurs who are either turning to specialized firms, or receive financial reports from companies and contractors are studying them carefully. Entrepreneurs interested primarily reliability and creditworthiness of the counter party, ie, the extent to which the company may be liable for its obligations and that her partner will receive in the event of liquidation (bankruptcy) of the firm, as well as whether the firm-contractor to repay their debts on time.(Robbins, 1986, 25)

Depending on the purpose of analyzing financial statements and interested in the results of users using different types of analysis and a different set of indicators - financial ratios, namely:

Absolute figures for information reporting, allowing to draw conclusions about the main sources of raising funds, their investment directions, sources of cash inflows, the size of profits, distribution of dividends:

Comparable percentages (Percentage Changes) to read statements and identify deviations from the most important articles of the financial statements;

Analysis of the percentage changes in the horizontal (Horizontal Percentage Changes), which characterize changes in individual items of financial statements ...
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