Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / #1 Financial statement analysis plays an important role in the balance and security of the economy in that financial statements are used in a variety of faculties by a great many different users

#1 Financial statement analysis plays an important role in the balance and security of the economy in that financial statements are used in a variety of faculties by a great many different users

Business

#1

Financial statement analysis plays an important role in the balance and security of the economy in that financial statements are used in a variety of faculties by a great many different users. “Financial statements are demanded because of their value as a source of information about the company’s performance, financial condition, and resource stewardship (Revsine et al, 2018, p. 1-3).” As such, when there is little confidence in the application and reliability of financial statements there becomes a lack of investing in the economy by consumers and investors. According to Rezaee (2017, p. xi), as a result of the global financial crisis that was brought on by Enron, WorldCom and others that perpetrated enormous financial scandals, regulators of corporate financial statements really began focusing on better understanding how to identify malfeasance through more thorough financial statement analysis.

            Through the process of analyzing financial statements there is much that is to be gleaned from the information that is provided by straightforward reporting. As previously mentioned, financial statements are a means through which users seek information for decision making. “The primary objective of capital markets is the allocation of financial resources (Gruber, 2014, p. 13),” When there is confidence in the financial reports, there are those that are willing to sow into the economy. Financial analysts that provide feedback and thorough evaluations provide a necessary service for internal use for budgeting, decisions on investments or shifts in business, bonus’, and so forth. It is important for a company to decide what information will be made available as public knowledge on their financial statements, the information can either help or hinder the company (Revsine et al, p. 1-3).

            Jesus said to the Jews in John 8:32 (NKJV) that if they followed his teachings that the truth would set them free. Although, this is not a straight-line application of what he was talking about, I believe that truth equaling freedom is a universal reality, as truth in financial statement analysis is an example of this in that greater understanding brings wisdom and thus results in wise decision making whether it is by a bank, an investor, or shareholders.

 

 

 

 

#2

Financial statement analysis is an evaluation of finance statement numbers and trends over time.

“If you want to know more about a company, its past performance, current health, and prospects for the future, the best source of information is the company’s own financial statements” (Resvine et.al, 2020).

These statements include balance sheets, income statements, cash flow statements, and statements of shareholders’ equity.

Financial statements are used to identify issues within a particular area. Once all the information is gathered investors use these documents to decide whether or not it is a smart choice to go into business with particular companies. “Complete information provided by reliable sources enhances the probability that the best decisions will be made” (Resvine et. al., 2020). These statements are then used to evaluate trends and predict future outcomes “Financial statements provide a basis for evaluating what happened in the past and projecting what might occur in the future” (Resvine et. al., 2020). “Trends and relationships provide insights into a company’s economic opportunities and risks including market acceptance, costs, productivity, profitability and liquidity” (Resvine et.al., 2020).

Faithful representation Is the concept that financial statements be produced that accurately reflect the condition of a business. “Financial account is a moral science. It is the science of stewards telling the truth to the owners towards whom they have ethical obligation to give an account” (Bowyer, 2017) Much of the bible is written in regard to being a steward and acting on good faith. “It is required in stewards, that a man be found faithful.” (1 Corinthians 4:2 KJV). Being transparent and honest when generating financial statements goes hand in hand with the Biblical implications of reliable and representationally faithful financial statements.

 

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE