b) Discuss in detail five (5) roles of financial reporting in capital markets. (10 marks) c) Financial Statement analysis is the process of evaluating a company's financial health and performance. It is a crucial tool for businesses of all sizes, as well as for investors and creditors. Discuss any five (5) benefits to a business that accrue due to financial statement analysis.
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- Identify which financial statement is required to calculate each of the following: a. Profitability b.solvency c.efficiency d.liquidity 2. Explain how a financial manager may use financial ratios to analyse the financial performance of a businessDefinitional problems: Listed are eight terms that relate to financial statements:1. Balance-sheet statement2. Income statement3. Cash-flow statement4. Operating activities5. Investment activities6. Financing activities7. Treasury account8. Capital accountChoose the term from the list that most appropriately completes each of the following statements:1. As an outside investor, you would view a firm's____________ as the most important financial report for gauging the quality of earnings.2. Retained earnings as reported in the________ represent income earnedby the firm in past years that has not been paid out as dividends.3. The_________ is designed to show how a firm's operations have affectedits cash position by providing actual net cash flows into or out of the firmduring some specified period.4. Typically, a firm's cash flow statement is categorized into three activities:________ ,________and ___________,5. When you issue stock, the money raised beyond the par value is shown in the…The underlying purpose of the conceptual framework for financial reporting includes which of the following? I. increase financial statement users' understanding of and confidence in financial reporting. II. enhance comparability amohg companies' financial statements. II. allow new and emerging practical problems to be more quickly solved. Il only a. O b. I, Il and II Oc. I and II only O d. Ionly
- he underlying purpose of the conceptual framework for financial reporting includes which of the following? I. increase financial statement users' understanding of and confidence in financial reporting. II. enhance comparability amohg companies' financial statements. II. allow new and emerging practical problems to be more quickly solved. O a. Il only O b. I, Il and III Oc. I and Il only O d. I onlyWhich of the following best describes the scope and purpose of financial statements? a) A way to report the historical financial performance of a businessb) A way to forecast the future financial performance and financial position of a businessc) A way to report the historical financial performance and financial position of a businessd) A way to forecast the future financial performance of a businessWhat does the below financial statement tell you about Nealon, Inc? This analysis uses accounting reports for an understanding of a company’s current economic condition and project into the future. A financial analysis allows management and owners to plan, correct and proceed properly for the best success. Review and analyze the following Financial Statement using horizontal analysis and ratios. Please be as descriptive as possible.
- Question 5 Discuss how a company evaluates their financial performance, such as their ability to pay debt, profitability, debt, and the rate of return on their investment. Provide the formula, and interpretation of the analysis on the company financial performance.The return on total assets is the focus of analysts, creditors, and other users of financial statements. 1. How is the return on total assets computed? 2. What does this important ratio reflect? 3. Return on total assets can be separated into two important components. Write the formula to separate the return on total assets into its two basic components. 4. Explain how these components of the return on total assets are helpful to financial statement users for business decisions.Accounting and the BusinessEnvironment1. The primary objective of financial reporting is to provide information useful formaking investment and lending decisions. To be useful, financial information mustpossess certain characteristics. State these characteristics and discuss each.2. Accountants often refer to GAAP. What does the acronym GAAP means and why isit important in accounting?3. What does the acronym FASB represent and what role does it play in financialaccounting?4. Suppose you are the sole owner of a bicycle sales and repair shop for many years.Which business type would best protect your personal assets from product liabilityexposure and why.5. Suppose you and a friend developed a new technology for home computer systems.However, you both need to raise a large amount of capital to build the productionand support facilities to market the product successfully. Explain which of thebusiness type would be best suited to help the company raise the necessary capitalto begin…
- The objectives of financial reporting include which of the following? a. Financial reporting should provide information ·a. that is comprehensibie to all potential investors. b. Financial reporting should provide information directly to potential investors about the nature, timing, and uncertainty of prospective cash dividends. c. Financial reporting should provide information that is useful to potential investors in making rational investment decisions. d. Financial reporting shouid provide information about an enterprise's economic resources bưt not about circumstances that change those resources.Discuss the four basic Assumptions that underline the financial Accounting Structures with example. b) Match the qualitative characteristics below with the following statements. I. Relevance VI. Comparability II.Faithful representation VII.Completeness III. Predictive value VIII.Neutrality IV.Confirmatory value IX.Timeliness V. Free from error X. Understandability (i) Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. (ii) Having information available to users before it loses its capacity to influence decisions. (iii) Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future.Question: When preparing financial statements, which involve the culmination of various accounting principles and concepts, the process is crucial in portraying a company's financial health and performance. Among the key components, the income statement and the balance sheet stand as fundamental snapshots. The income statement delineates a company's revenues, expenses, and ultimately its profitability over a specific period, employing either the accrual basis or cash basis accounting. On the other hand, the balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity at a given point in time, adhering to the accounting equation where assets are equal to liabilities plus shareholders' equity. Furthermore, the matching principle necessitates that expenses be recorded in the same period as the related revenues they helped generate, facilitating a more accurate representation of the company's financial performance. In the context of accounting…