INTERNATIONAL FINANCIAL REPORTING

International Financial Reporting

International Financial Reporting! APC 311

Introduction

Every enterprise aims to maintain its market dominant position as well as to maximize its profitability through a series of activities, so as to remain competitive within framework of the market mechanism and to advance functions. It is necessary for managers to be familiar with the overall performance of the enterprise, in an effort to develop an effective strategic plan for companies' prosperity and progress. Thus it is essential to identify the capabilities of a company in economic terms, so as to enable first line management to determine the business's objectives and targets, concerning its operations. (Scott, Martin, Petty , Keown, 2003, 32 )

In an effort to examine an enterprise in financial terms, so as to provide managers with sufficient information, referring to its economic evolution, certain financial statements have evolved, such as Balance Sheet, Trial Balance, Profit and Loss Account, Ratios and so on. (Ross, Westerfield, Jaffe, 2003, 10)

A company's published report and accounts will contain a confusing set out of figures. Whilst these figures will all be based on historical facts and can be taken as accurate, a question arises; what do these figures mean? An answer to these question will require an analysis of the figures contained within published report and accounts, using a series of Financial Ratios.

In this assessment, we will analyze and critically evaluate the most common financial ratios by incorporating examples relevant to enterprise Limited. This assessment will be focusing mainly on the enterprise; we will also compare the results to those of Enterprise Group Limited. These financial ratios have been applied according to most recent figures that appear on the Athens-Fame electronic library. (Peters, Schaffer, 2005, 4)

The objective of financial statements: why are financial statements prepared?

The objective of providing information about the financial position and performance for assessing the stewardship of management and for making economic decisions appears relatively unproblematic. Accounts statements have long been used as a stewardship document prepared for existing shareholders as a statement of what has been done with the capital that these investors gave to the management of the company. In other words, accounts are a statement by the company to its investors that those monies invested with it are safe, well used and have been invested in a particular manner. As well as functioning as a basic stewardship document, the accounts must also allow users to assess the entity's financial adaptability and its ability to generate cash flows. Financial adaptability relates to the entity's ability to change and exploit business opportunities, and refers to the fact that it is desirable to have plenty of cash, readily realizable assets and a good credit rating. Financial statements should also allow users to assess and predict the entity's present and future level of cash generation, as this is a major influence on any user's economic decision-making. (Peters, Schaffer, 2005, 17)

In practice financial statements can be, and are, used for many purposes including comparison of investment ...