Please Answer for question # 2 double-spaced. The final paper should be ten page
ID: 2567969 • Letter: P
Question
Please Answer for question # 2
double-spaced. The final paper should be ten pages graphs and exhibits do not count as pages Since most ideas are not original, they must be cited in the body of the work, and referenced on a separate page at the end of the work (please see short sample paper at the end of this document) Scenario The board of directors of the three respective companies have been replaced. As prospective financial accountants you have been elected to form a team that will review certain key areas of the compan assigned to your team. For the respective company assigned, you are responsible for establishing if there are any 'going concerns' with the company. Each team will establish this by reviewing (1) Managements letter to Shareholders, (2) the independent auditors report, and (3) and compiling key ratios from the financial statements for the past five years. In other words, you have been charged to provide information to the new board of directors as it relates to overall company performance and solvency For each company assigned, review the annual financial report (10-K) and provide in essay format the following: 1. The purpose of financial statements a. Who are the users of this information? b. What is the common goal of all users of financial statements explain the importance of each. whether its operations are: 2. Identify the four financial statements that are the building blocks of financial analysis and 3. Identify the industry in which the company being analyzed operates, and determine a. LocalExplanation / Answer
Answer(2)-Four Important Financial Statements are as following-
Balance Sheet- It has two sides which contains "Assets and Liabilities". Assets are company's valuable things and property, Liabilities represent the Obligation, that company has to repay.
Importance- Balance sheet is very important in knowing the company's liquidity and solvency position. Balance sheet tells the financial position of company. Investors can take investment decision by analyzing the balance sheet ratios.
Income Statement- This statement has two sides that contain "Income, expenditures, profit anf loss for the period. Expenditures are deducted from income and then Profit before tax is calculated, after getting PBT, Tax is deducted and Net profit is known.
Importance- Income statement is useful to know the profit anf loss for the period and current year profit can be compared with the past profits. Investors know the profitability position of the company through this statement.
Cash Flow Statement- This statement tells the increase or decrease in cash and cash equivalents for a particular period. It contains Cash Inflow/Outflow from Operating, Financing and Investing activities.
Importance- This statement tells the adequate position of cash in the company. Investors can know whether the company has sound cash position or not.
Statement of Shareholder's Equity- It tells the paid up capital, common stocks, preferred stocks, treasury stocks and Retained earning amount in the company.
Importance- Investors can know about the share capital of the company, also the earning's amount retained by company. Investors can know the number of common shares and accordingly can calculate earning per share.