Importance Of The Financial Report

2170 words - 9 pages

Owners, managers and outside stakeholders of a company need reliable financial information to work smarter, control their costs and gain strategic operational insights respectively. This can happen by the provision of financial reporting framework which it will be discussed in the first paragraph of the essay. Then the scope of the framework will be explained base on financial reports, reporting entities and qualitative characteristics and their users. After that, financial statement will be critical analyze based on its elements, assumptions and characteristics. At this point some limitations of the financial statement will be given. Furthermore, taking into consideration that companies are care mostly about their profit maximization and their financial health, capital maintenance and its concepts will be explained. This introduce as to the fact that companies do not show the social and environmental harms that are creating due to misallocation of information which it will be a matter of discuss.
According to Financial Accounting Standard Board (FASB) conceptual framework’s scope and purpose is to underlie the preparation and presentation of financial statements and to serve as a guide the determination of accounting issues that are not attached directly in the International Accounting Standard(Alexander & Briton, 2004, pg137). Furthermore, it shows financial information to existing and potential investors, lenders creditors and further user groups (Carlon et al., 2012, pg11) This financial information are provided through the financial reporting, the qualitative characteristics of financial information, the reporting entity, measurement of the elements of financial statements and concepts of capital and capital maintenance.
Beginning with the financial reports are documents that track how much money a company is making (Biafore, 2005, pg5). The primary users are lenders, creditors and investors who use this information for their decision making in situations like settling loans, buying, selling or holding equity. Information is also needed for the users to know how effectively and efficiency was the management of entity’s existing resources or for future net cash inflows. It was noted by the IFRS framework that financial reports are not satisfied all users’ information for their economic decision making (ICAA, 2012, pg26), however this can happen if they consider information from other sources as well. Then moving to Reporting entities provides financial information to suppliers and investors on how well the company performs and other events and transactions like, equity instruments and issuing debt. Therefore, the users can distinguish between these changes and make their own economic decisions. Moreover, users can use qualitative characteristics to identify what information is most helpful to them according to reporting entity in the financial reports (David et al., 2009, pg12). However, this financial information cannot be useful to the...

Find Another Essay On Importance of the Financial Report

Financial analysis report of Unilever and Colgate Palmolive

2293 words - 9 pages companies' performance, financial health along with industry's trend will be considered and evaluated in order to give necessary information to the investors. The report concludes of three parts: (i) A brief profiles of the two companies; (ii) Financial ratios analysis which covers all five types of common ratios including liquidity, leverage, turnover, profitability and market value ratios from 2011 to 2013; (iii) Conclusions drawn from the

The Purpose of Financial Statements Essay

1835 words - 7 pages company. Shareholder have no say in how the company is run, which means their source of information is all the financial statements Profit and Loss, Balance Sheet and Cash Flow Statement. As well as all the accompanying reports such as, the Directors report and Auditors report. These sources can give the shareholder detail account of the company's activities covering the four areas of information: profitability

The Profession of Financial Planners

1814 words - 8 pages There are many different definitions for the profession of a financial planner. The services that financial planners offer usually vary widely. Some financial planners look at every aspect of a client’s life and show the client how he or she can spend and save money more wisely. Other financial planners show clients where and how to invest money (“Financial planners,” 2008). Four of the major specialty areas of financial planners include major

The Financial Analysis of IHG

4851 words - 19 pages . Shareholders' Investment6.1 Earning Yield6.2 Price- Earnings Ratio6.3 Dividend Cover6.4 Dividend Yield7. Trend Analysis7.1 Return On Equity (ROE) Ratio7.2 Net Profit Margin7.3 Total Asset8. Post Balance Event9. Group Reflective10.Bibliography11. Appendix1. IntroductionThe purpose of writing this report is to analyse financial performances of InterContinental Hotels Group (IHG) for potential investors. The results are calculated by using ratio model

The Concept of Financial Intermediation

1073 words - 4 pages I. Introduction Financial intermediation is usually understood as a process of connecting lenders and borrowers, performed by banks and other intermediaries . It is a main basis of all financial systems, which are extremely important for capitalist economies. It allows banks to make profits and is one of the sources of economies’ well-being. Why is financial intermediation so important? Because it brings together economic agents with surplus

Financial Crisis of the 1980s

1094 words - 4 pages The financial crisis of 2008 and 2009 is considered by others as the worst financial crisis since the Great depression of 1930. However there were other financial crisis which had happened after the Great depression which were equally disastrous. The one that comes in mind was the financial crisis of the 1980s and early 1990s. It is always overlook by others because of the 2008 credit crunch which happens to be the recent one. It became known

Repercussions of the Financial Crisis

960 words - 4 pages The most important thing on many people’s minds now are probably the financial crisis that is occurring. Due to its enormity, the effects, like the companies firing employees to cut costs, can be felt all around the world. As the repercussions are huge, so we must be well prepared. However, before I go on to the repercussions of the financial crisis, it is essential to know why it occurred. The roots of the crisis can be traced back to the

The Importance of Globalization

2097 words - 8 pages of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual (Held and McGrew 1999 P.2)”. On the other hand, business journalism is facing opportunities and threats which globalisation brings them. In order to see how globalisaiotn is important to business journalism, we will focus on how Internet affects industrial norms of business journalism. In the following

the importance of education

1207 words - 5 pages THE IMPORTANCE OF EDUCATIONEducation has a great social importance especially in the modern, complex industrialized societies.What would you do if you were not allowed to get an education? You couldn't read or write. You had to work a minimum wage job at a factory and you weren't happy with the job. You couldn't teach your kid any skills because you didn't learn anything. The biggest part of growing up is making the right choices that benefit

The Importance of Art

667 words - 3 pages and financial gain. The message behind art is to show ideas and ideas that are relevant to society. Art is meant to enliven life and things, though modern art shows more if life’s negativeness. Galleries, parks and museums view to the public with meaningfulness and with the appreciation for art. Art is still effective as hand written material was seen in the walls of Ancient Egypt. Modern art stimulates the thought and fosters greater

The Importance of Education

814 words - 3 pages The Importance of Education Education has always been a crucial part of society for the past centuries. Some believe that our education is a privilege. Some believe that our education is a right. Some believe that our education is an obligation. The only obligation we might have towards education is to treat it as a privilege as well as a right, but certainly not an obligation to have an education. Education has been the basis for

Similar Essays

The Importance Of Financial Planning Essay

659 words - 3 pages Throughout life we a faced with financial decisions. Much of the time we are unable to manage our funds the way that we would have liked. Successful financial planning allows you to have a clear prospective on your future financial needs. In order to gain the financial freedom of your desire you will need to start by reviewing your current situation. Like many others my finances are not what I?d like them to be. With everyday that passes I ask

The Importance Of Financial Management In Small Business

2795 words - 11 pages Running head: THE IMPORTANCE OF FINANCIAL MANAGEMENT IN SMALL BUSINESS PAGE \* MERGEFORMAT 1 The Importance of Financial Management in Small BusinessAbderrahim AouchiMaryam OihabiAbderazak OuassouTexas A&M UniversityAbstractThe purpose of this paper is to explore the automotive industry and to understand opportunities and barriers of starting a small auto parts retail store and entering the market place. Quickfix Auto-parts case study is a

Financial Report Of Loewen Group Inc.

3621 words - 14 pages Financial Report of Loewen Group Inc. The Loewen Group Inc. was founded in 1969. The company has two major headquarters in North America, one in Burnaby, British Colombia and a second in Cincinnati, Ohio. Loewen Group Inc. (L.G.I.) is the largest funeral services enterprise in Canada and is the second largest company in the North American Funeral Services Industry. L.G.I. owns 918 funeral homes and 269 cemeteries and also engages in the

Financial Analysis Report Of Unilever And Colgate Palmolive

2293 words - 9 pages companies' performance, financial health along with industry's trend will be considered and evaluated in order to give necessary information to the investors. The report concludes of three parts: (i) A brief profiles of the two companies; (ii) Financial ratios analysis which covers all five types of common ratios including liquidity, leverage, turnover, profitability and market value ratios from 2011 to 2013; (iii) Conclusions drawn from the