The purpose of the Paper is for you to show learning achieved in the course by describing your...

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The purpose of the Paper is for you to show learning achieved in the course by describing your understanding and application of knowledge in the field of accounting. The Paper should also focus on real life, real time application of topics covered in this course; the uses you have seen and the uses you can envision. Focus of the Project Select one of the major topics listed below using course topics previously referenced as the basis for the paper. Explain the role of the FASB in monitoring and controlling business reporting and accounting practices in the modern organization.
	
Document Preview: The purpose of the Paper is for you to show learning achieved in the course by describing your understanding and application of knowledge in the field of accounting. The Paper should also focus on real life, real time application of topics covered in this course; the uses you have seen and the uses you can envision. Focus of the ProjectSelect one of the major topics listed below using course topics previously referenced as the basis for the paper. Explain the role of the FASB in monitoring and controlling business reporting and accounting practices in the modern organization. In what ways do FASB rules limit business practices and reporting financial information? How do such rules and regulations protect the business and public stakeholder communities? To whom is the FASB accountable and who appoints members to FASB? Explain how external stakeholders use financial information such as company income statements and balance sheets to make decisions about the company in such cases as advancing credit or offering leasing vehicles. Discuss how common financial ratios and investment analysis is used to conduct due diligence by external parties and how factors such as accounts receivables, accounts payables, earnings returns, returns on inventory, etc. are applied to evaluate a firm’s financial and business health. Discuss depreciation as a tool for managing and evaluating the life and utility of assets of the firm. What are the methods and under what conditions would each method be used and applied? Does a firm’s tax planning influence the decision? How do external stakeholders assess the validity of depreciation schemes? Your paper must: Identify the main issues in the chosen area and accurately respond to each of the questions from the chosen area. Build upon class activities by referencing new learning that has occurred. Present specific current and/or future applications and relevance to the typical workplace. Guidelines for Writing the Final PaperPaper...

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Table of contents 
Introduction…………………………………………………………………………………….2 
Uses of financial statements………………………………………………………………...2 
Uses of ratio analysis…………………………………………………………………………4 
Other evaluation parameters………………………………………………………………..7 
Conclusion…………………………………………………………………………………….8 
References…………………………………………………………………………………….9
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troduction: 
Financial information of a company is presented in its balance sheet, income statement 
and cash flow statement.  These reflect a company’s well-being in terms of its financial 
health and state of operations. Both external as well as internal stakeholders use this 
information to analyze past performance and build-up expectations for future potential. It 
can be used to assess the risks associated with the firm and thus are very a useful tool 
when analyzed critically. Here we elaborate some advantages and uses of financial 
statements analysis from various perspectives. In addition, we examine ratio analysis 
and other data items that can be useful in decision-making process. 
Use of financial statements  
Financial statements are used in myriad systems for economic decisions to be made 
related to a company. Creditors, investors, managers, tax authorities and regulatory 
bodies among others use the data in these statements to analyze the past performance 
of a company. The past performance is often seen as a base to build-up future 
expectations in the wake of market and economic trends.  
The level of risk in an investment can be analyzed based on how predictable its future 
performance is. For instance, if a company’s earnings per share is expected to lie 
between $3.5 to $3.7 and another company’s earnings per share is expected to lie 
between $4 to $5, since the former has lesser variation in its expected earnings it is said 
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to have lesser risk than the latter.  And thus an investor positioning his funds in the latter 
will command a higher risk premium. 
Creditors will gauge the sales, income, return on investment and cash flows of a 
company before deciding if they wish to lend or not. Other factors that can be critical to 
creditors are how much of debt a company already has. More the debt in the company’s 
financials, higher is the risk associated with the company. Higher the risk associated 
with the company, a creditor would like more return for his investment for the additional 
risk he has assumed and will therefore charge a higher interest rate for the money that 
is lent. The creditor could also be interested in the liquidity position of the company.  
This can be judged by looking at the current assets and liabilities on the balance sheet 
of a firm.  Ideally, a firm should have twice as much current asset as much current 
liabilities it has. But this varies a lot with the nature of industry the firm operates in.  
Based on industry benchmarks , this value gives an idea about the liquidity position of a 
firm.  
Leasing decision is based on answers to a different set of questions. The lessor (the 
one who leases to another person) will look at a lesse’s (person taking the leased asset) 
capability to pay monthly rental in case of an operating lease.  If the lesse wants the 
lease to be structured as a financial lease (where the asset is capitalized), the lessor 
would like to know the lesse’s capability to pay the initial outlay upfront.   In addition, 
financial analysis in terms of Net Present Value comparisons using the financial 
statements can help decide whether leasing is a better decision or the asset should 
rather be purchased.  
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In addition to above two scenarios, there are many important business decisions where 
financial statements and their analysis play a key role in business decisions. They are 
the window to a firm’s operations and management efficiency. Based on these numbers 
one can question company strategy and assess the potential of the same.  
Use of financial ratios  
When an investor intends to pick up stake in a company, they perform due diligence on 
that company. It is nothing but a detailed examination of the company in various 
aspects. It can be legal, financial,

The purpose of the Paper is for you to show learning achieved in the course by describing your understanding and application of knowledge in the field of accounting. The Paper should also focus on...

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