ACC 305 Week 5 Final Assignment

Better Essays
Financial Information

ACC 305
Brenda Forde

Financial Information It is important for every internal and external stakeholder in a company to understand if a company is being profitable or not. A company that is failing or not growing can often come from poor financial planning and analysis. The difference between failure and success come from analyzing financial information. Analyzing financial information such as balance sheet, income statement and cash flow statement companies can predict and control their future. Financial statements are the primary documents used in reporting financial information to banks, investors, suppliers and others. Along with financial information, financial ratios can help stakeholders evaluate the business performance. They can deliver a better understanding of a variety of things going on in the company. Financial information and ratios are important tools to help predict the growth of a company and to compare them to other companies. Stakeholder can consist of both internal (employees, managers, board members, etc.) and external (investors, customers, suppliers, etc.). As a stakeholder in a company, it is very important to know how the company is performing. Financial reporting can deliver information to help them know how profitable the company is or not. Investors and creditors have the right know if their investment is being spent sensibly and if they will be getting a return on their investment. Employees want to know if the company they are working for is doing good or bad so they can plan for the future. If the company is not doing well, they might not get a raise or the company could go bankrupt and they could be without a job. Many internal stakeholders have stock options with the company; therefore it is important for them to know if the company they are working for will be making money or not which in turn will make them money. All stakeholders, internal or external, want to know how



References: Bartov, , E., & Mohanram, P. S. (2014). Does Income Statement Placement Matter to Investors? The Case of Gains/Losses from Early Debt Extinguishment. Accounting Review, 89(6), 2021-2055. doi:10.2308/accr-50839 Huang, Y., & Zhang, G. (2012). An Examination of the Incremental Usefulness of Balance-Sheet Information Beyond Earnings in Explaining Stock Returns. Journal Of Accounting, Auditing & Finance, 27(2), 267-293. doi:10.1177/0148558X11409153 Spiceland, J. D., Sepe, J. F. & Nelson, M.W. (2011). Intermediate Accounting (6th ed.). New York, N.Y.: McGraw-Hill Irwin. ISBN: 9780077500375 Zager, , K., Sačer, I. M., & Dečman, N. (2012). Financial ratios as an evaluation instrument of business quality in small and medium-sized enterprises. International Journal Of Management Cases, 14(4), 373-385

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