Besides, it is a critical tactic in evaluating the company’s economic prospects and risks and also to protect investment considering the fact that its propels investors to craft and implement productive decisions and plans such as investing in equity or debt securities, extending credit through short or long term loans, valuing a business in an initial public offering (IPO), and evaluating restructurings including mergers, acquisitions, and divestitures, all drawn up with respect to the development and sustainability of the firm's operations towards hitting the market waves aimed at detailing colossal profits. Furthermore, Financial analysis determine the level of business operations, continuity or incoherence of the business; level of manufacturing product acquisition, extent of service expansion, purchase or rent/lease of production machinery and equipment, and the issuance of stocks, negotiation for bank loan and investment of capital; thus allowing the management to decide and implement alternatives to enhance business operations. Conclusively, the core rationale of financial statement analysis is
(a) Analysis of financial statements is considered to be an effective tool for analyzing the operating and financial performance of an organization. The analysis of financial statements is useful for taking practical economic decisions by various users. There are different types of tools available for the analysis of the performance of an organization. However, the horizontal and vertical analysis is a very widely used technique for developing a better understanding of financial strengths and weakness of an organization. For the purpose of this assignment, as a Financial Analyst for Middle East Venture Capital LLC, I have chosen Oman Fisheries Co. S.A.O.G.
Mergers and acquisitions are basically associated with the concept of buying, selling or combining different companies for the purpose of expansion and growth for the companies. As we all know there are two ways we can acquire a target- either by cash or by stock or a combination of both. Well, transfers of ownership by cash are very straight forward and clear for the two parties involved in this transaction. While payment using stock options will be given to the acquired company at a ratio equivalent to the amount they are being acquired
Supporters said that, fair value are usually claim for the facts of the market price or estimate price on current situation and sometimes they have admit there will be no active market or no market at all, thus no real price. Moreover, fair value accounting also means as which lowers its value in the market and at the same time it decline the quality of a company’s own debt. Fair value accounting is an additional momentum to a destructive downside overshoot. From the FASB framework concludes that, “Fair value reflects losses that have been incurred, it does not cause losses.” In a downward cycle, this appears untrue. I believed that there are many solutions or approach that we have beside fair value accounting that can be used to solve the problem arise in the financial accounting such as based on historical cost, current cost, realisable value and present value.
Furthermore, the summary report of the income statement, cash flow statement, and balance sheet clearly show one’s personal financial status paving the way for better managing personal finance. Describe the three products of accounting and bookkeeping procedures that are most useful in personal financial planning. In personal financial planning, the three products of accounting and bookkeeping procedures that are most useful are the; income statement, cash flow statement, and the balance sheet. Income statement: The income statement summarizes income and expenses for a period, and also shows the
Watts’ accounting regulation explanations and evidence have important implications for accounting regulators (Watts 2003). Asymmetry in litigation leads to asymmetry in regulator’s cost. In essence, what Watts is saying is that, conservatism cuts the political expenses on regulators and standard setters. Moreover, to decrease taxes and increase a firm’s value, there must be an asymmetry between gains and losses. If a firm under report profits they will pay less money, hence there is a direct link between profits and
Capital market is the market for long term loans and equity capital. The stock market plays a vital role in economic development of a nation, since it acts as mediator between borrowers and lenders. A well-function stock market will contribute to development of an economy through two important channels such as boosting saving and allowing for more efficient allocation of resources Baskin, J. (1989). Stock market is an important part of the economy of a country.
A securitization transaction is widely used by the organizations in order to prevent any potential risk happen in their organizations. According to Senanayake (2010) on her books is Asset-backed securitization and the financial crisis stated that, securitization is the process of individual loan packaging and other debt instruments. Where the packaging process will be transfer as a security to improve a rating or credit status. While Davidson et al. (2003) stated that securitization is a process of packaging and transfer financial promises into form where it can be easily transfer to other investors.
Most of them are of the view that there are a number of benefits in adopting this principle. One major explanation is that conservatism arises because it is an essential component of the efficient measures and technologies that are employed in organizations and companies (Givoly, Hayn & Natarajan, 2007). Using this explanation, conservative accounting is a mode and means for dealing with problems dealing with asymmetric information and limited liability (Sohn, 2011). Even in those cases where contracting as well as managerial accounting will be separated from accounting and reporting, most of these problems will continue to exist. The contracting measures and explanations have shown that conservatism is quite beneficial when viewed from investor perspectives.