Question

1. From the perspective of an investor, what type of information might you be most concerned with on the balance sheet and income statement? Include the type of return an investor may expect to receive in exchange for providing financial resources to a business.

2. From the perspective of a creditor, what information might be most important to review on an income statement or balance sheet? Include the type of return a creditor may expect from providing financial resources to an organization.

3. Based on your responses, indicate if you would conduct business with the company you have selected for your Financial Statement Analysis Report. Participate further by responding to peers indicating if you agree or disagree with their assessment of the type of information investors and creditors would be most concerned with on an income statement or balance sheet.

Answer 1

Investor Prospective

Income statement

• Sales and Closing stock will play major role in the income and Expeses statement
• Day to day expenses will be less in the following period

Balance sheet

• Share holders fund
• Investor funds
• Long term Debt and Borrowings to be less comparing to capital adequacy ratio
• Company has to ful fill the capital gearing ratio
• Fixed Assets to be more comparing to capital
• Cash Liquadity to be less

Investor protection

• Investor Equity
• Large instutional Inverstors
• Foreign Investor
• Investor in debtors

These are the investors we have to protect the fund from the company

Impact of Investors

• Investment ratio with other person
• Amount invested in long term investment rather than short term investment
• Before investing reading the agreement carefully
• Long term protection fund policy
• Proper utilisation of funds
• other investing policy document readed carefully
• Proper management decision policy

Proespective of Creditors

Income and Expenses statement

• General purchases
• Credit purchases
• outward Charges

Balancesheet

• Creditor
• Creditors quarterly statement
• Creditor with Discount
• Rate negiotiation policy

Impacts of Financial Resourse in Organisation

• Agreement with 3rd parties
• Creditors policy statement
• Review of credit policy
• Terms of aggrement
• Genunity of transation
• Accountability of principle creditor
• 3rd party financial statement analysis
• Other management policy related to creditors