1. identify methods that analysts use to analyze financial statements. Ratios are one such method. What are the types of ratios and which ratio do you think is most important in analyzing the financial condition and performance of a company? 2.Distinguish between managerial and financial accounting as to (a) primary users of reports, (b) types and frequency of reports, and (c) the content and purpose of reports.

Question 1

Analyzing financial statements assists a company leader to evaluate the opportunities and issues the organization faces financially. At its core, the financial account is a pulse of the financial effectiveness of the organization, defining whether it is capable of paying expenditures. The various methods of evaluating a financial statement include horizontal and vertical financial data analysis together with trends and rations in economic analysis. There are four types of ratios, and they include liquidity and the current rate, solvency ratios, profitability and common efficiency ratios (Carraher & Van Auken, 2013). The most effective method is the liquidity and the current ratio that is commonly utilized by many industries as it shows a company’s capacity to cater to its short-term statements. Still, a proportion of greater than is typically least since anything fewer than one means the business has added liabilities than the corresponding assets. A high ration show more a secure cushion that enhances flexibility since some of the supply items and receivable stability might be effectively changeable to cash.

Question 2

Managerial and Financial Accounting

Under the primary users of reports, in managerial accounting, the data will be utilized within the organization, by the workers and managers, while in financial accounting; external parties including banks will use the data in the reports. When it comes to types and frequency of the news, in managerial accounting, the data is reported constantly, and all the internal information will be formed as regular as required (Hilton & Platt, 2013). On the other hand, data in fiscal accounting will be reported occasionally as the data is formed based on a monthly, quarterly and monthly basis. Under the purpose of the reports, managerial accounting information will have a particular meaning that is used by private parties in analyzing events while reports formed under financial accounting is only for all-purpose purposes. The content of data in financial accounting is greatly aggregated as is it focuses the business as a whole while under the managerial accounting, all data are very detailed and concentrates more on subunits of the business.

References

Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336.

Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.