FINANCIAL ACCOUNTING AND REPORTING

Financial Accounting and Reporting

Table of contents

Introduction3

Discussion3

Users of financial information3

Shareholders or potential shareholders5

Lenders6

Customers6

Suppliers6

Analysts6

Government and government agencies6

Employees7

Members of the public7

Published Financial Statement (Tesco plc) Analysis8

Profitability Analysis8

Liquidity Ratios9

Leverage Ratios10

Assets Management11

Investor Ratio13

Conclusion14

Financial Accounting and Reporting

Introduction

The components of financial statements which include a statement of comprehensive income, statement of financial position, a statement of changes in equity, statement of cash flows and notes to the accounts forms the financial statements of a company which are used by a variety of users.

The four financial statements from the summarized accounting data are:

A statement of comprehensive income or income statement presents the expenses and revenues and thereby presents the net profit or losses of a company for a particular period of time.

A balance sheet or a statement of financial position presents the current and noncurrent assets, current and noncurrent liabilities, and shareholders' equity of an organisation at a particular date.

A retained earnings statement or a statement of changes in equity reviews the changes in retained earnings of a company for a specific period of time.

Similarly, a statement of cash flows reviews the cash outflows (payments) and cash inflows (receipts) for a particular period of time.

Discussion

Users of financial information

The management company (the owner) should be interested in the ongoing effects of the company and if necessary take appropriate organizational and other measures to eliminate irregularities. Basic information about the economic-financial results of the enterprise are included in the financial statements and prepared on the basis of its relevant accounting records.

The financial statements allow for a fairly comprehensive assessment of assets, financial and outcome of an entity for a specified period of time (year, quarter, and month). The management entity should have the ability to use the figures contained in the financial statements and be able to learn from reading these reports. Keep in mind that the financial statements may also benefit other stake holders such as banks, when applying for credit companies, including joint stock companies whose shares are traded on the stock market -furthermore, the reports of these companies are publicly available. Based on the financial statements of listed companies conclusions are drawn which may affect the market price of shares. Enterprises should depend on the presentation of good and reliable information in financial statements.

The accounts of business processes based on source documents and verified periodically through the inventory is the most reliable source of information, which are very essential to be maintained by the company. Financial reporting can meet the specific requirements and demands of external stakeholders, such as tax offices, statistical offices and other institutions

The financial statements are executed on the basis of the relevant comparison, calculations, and the transformation which should be of interest to the management company (the company), directors, audit committees and other regulatory bodies Ability to use information contained in financial reports is an important aid in the management decision-making.

The users of financial statements can include a variety of users such as investors, employees, managers and creditors. Such users use financial statements in order to satisfy their vast variety of ...