Part1 (1page with the references) When analyzing statements, what external factors that affect...

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Part1 (1page with the references)   	When analyzing statements, what external factors that affect business must be considered? 	Write a 1-page paper including references about the similarities between a firm's capital budgeting decisions and individual investment decisions.  Part2(1page with references)S&J Plumbing, Inc.'s 2010 income statement shows a net profit before tax of $468, whereas the balance sheet that the company's equity for the fiscal year-end 2010 is $1,746.  	Calculate the company's return on equity and whether the managers areproviding a good return on the capital provided by the company’s shareholders.   Diagram the operating cycle of a service company.
	
Document Preview: Part1 (1page with the references)When analyzing statements, what external factors that affect business must be considered?Write a 1-page paper including references about the similarities between a firm's capital budgeting decisions and individual investment decisions.Part2(1page with references)S&J Plumbing, Inc.'s 2010 income statement shows a net profit before tax of $468, whereas the balance sheet that the company's equity for the fiscal year-end 2010 is $1,746.Calculate the company's return on equity and whether the managers are providing a good return on the capital provided by the company’s shareholders.Diagram the operating cycle of a service company.

Robert · Accepted Answer

Part 1 
When analyzing statements, what external factors that affect business must be considered? 
Financial statement analysis forms the backbone of any investment decision or evaluation of 
performance of the management by the stakeholders. Financial statement analysis should be 
done in tandem with the external factors as a standalone analysis of results without 
considering the external factors might make the decision or analysis biased or incorrect. 
The external factors that need consideration apart from financial statements are as follows: 
1) Political factor: Complexity and dynamism of the political situation of any country 
makes it imperative for stakeholders or investors to analyse each policy action. 
Developments on issues like tax laws, investment incentive, trade quota and 
restrictions, subsidies offered, trade agreements and regulatory framework need 
thorough consideration in arriving at any conclusion. 
2) Economic factor: They share a direct relationship with the potential attractiveness of 
any business venture. A detailed study of regional, national and global economic 
performance and derived trends, act as highly important factors in analyzing any 
business. 
3) Social Factor: They comprise of the social, cultural, demographic, and environmental 
characteristics of the region to which the business entity belongs to.  For eg Culture in 
America differs from that of Europe, China and Japan. The outlook of the people in 
each country is different which contribute to the shape the business takes. 
4) Technological Factors: It helps in achieving desired business productivity and 
efficiency.

Part1 (1page with the references) When analyzing statements, what external factors that affect business must be considered? Write a 1-page paper including references about the similarities between a...

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