Case 1-1 Ribbons and Bows Inc
1. FS as a tool in decision making on the point of view of: a. Shareholders
Financial statements provide a view on the company’s financial changes within a specific reporting period and confirm its overall state. They give information such that they provide shareholders with a picture of how well the company is doing. These enable them to evaluate a stock’s worth and aid them in making stock-related decisions such as buying/selling/retaining which provide them further on the status of their return on investment. Additionally, they reflect how the shareholders’ money are invested, its outcome and effect to the company. b. Management of the company
Financial Statements are useful to a company’s management in a number of ways. Most of the time, managers, presidents and other company heads rely on FS to carry out their management responsibilities such as operation planning and control. It provides them with specific details needed to carry out their planned activities and strategies to meet their goals. * Provide analysis of the state of the company in order to evaluate the flow of fund, check if cash generated is still enough to meet the demands/services provided by the company. * Help budget the company 's money for future activities. * Help set targets in sales and revenues. * For multi-national companies, FS analysis can help on deciding on which business unit to maintain/give up. * Adjust/ reorganize management strategy in order to further meet company goal and optimize income. * Help decide what rules or actions could be implemented that will be suitable given the company 's situation. * FS analysis of industry competitors can also help the management decide on where to focus to gain competitive advantage * Analyze effects of the risks/strategies taken by the company. * Aids in improving over-all entity efficiency since FS reflects which departments are profitable and which are not. * It also
Financial statements provide a view on the company’s financial changes within a specific reporting period and confirm its overall state. They give information such that they provide shareholders with a picture of how well the company is doing. These enable them to evaluate a stock’s worth and aid them in making stock-related decisions such as buying/selling/retaining which provide them further on the status of their return on investment. Additionally, they reflect how the shareholders’ money are invested, its outcome and effect to the company. b. Management of the company
Financial Statements are useful to a company’s management in a number of ways. Most of the time, managers, presidents and other company heads rely on FS to carry out their management responsibilities such as operation planning and control. It provides them with specific details needed to carry out their planned activities and strategies to meet their goals. * Provide analysis of the state of the company in order to evaluate the flow of fund, check if cash generated is still enough to meet the demands/services provided by the company. * Help budget the company 's money for future activities. * Help set targets in sales and revenues. * For multi-national companies, FS analysis can help on deciding on which business unit to maintain/give up. * Adjust/ reorganize management strategy in order to further meet company goal and optimize income. * Help decide what rules or actions could be implemented that will be suitable given the company 's situation. * FS analysis of industry competitors can also help the management decide on where to focus to gain competitive advantage * Analyze effects of the risks/strategies taken by the company. * Aids in improving over-all entity efficiency since FS reflects which departments are profitable and which are not. * It also