The financial statement can show the records of the financial activities of a business. It was designed for common people to be able to read and understand this information. Three strengths of the financial statement is it that the owners and managers are able to understand the financial position of the company, this also allows individuals the ability to evaluate the historical and prospective financial performance, and this statement gives a vivid picture of the company’s financial health which will be the base of the owners and managers decision making. This type of foresight is important to the affects of a success in continuing of the company’s operation. Employees also can benefit from this information especially those in a labor union or in bargaining with upper management for a promotions based of the proven thriving performance. For the investors, the strengths of the financial statement give them a clear picture on whether or not to invest more or less in the future.
The weakness of the financial statement is that it gives the public a clear understanding of the company’s financial position regardless of if it is good or bad. It also probably gives more of the company’s information than what the company would like to share. The company can also hide items with in this statement giving the company a little part of privacy, thus, making it hard to comprehend the giving information.
The company that I chose was Macy’s Inc. The trend in net profit shows that there was a 30.8% increase in the net profit of the company. The debt ratio as a percentage of the total asset was 76.6%. Currently the debt as a percentage of the equity is 61%. Macy's recorded a net loss of over $4 million in fiscal 2009; this was cause by the extensive line of credit given to customers and the high rate of non-payment or late payment since 2007. A confirmation of whether or not the company has taken the steps necessary to correct the negative trends the...
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