READ & REPLY
Read 1
Financial statement analysis is defined as, "the process of analyzing a company's financial statements for decision-making purposes" (Kenton, 2020). Financial statement analysis is important for business to be able to look through their financial statements and be able to make decisions based on what they find for the future of the business. Financial statement analysis is important because, " they are essential to monitoring a company's performance over time, as well as understanding how a company is progressing toward key strategic initiatives" (Stobierski, 2019). Because of the importance of financial statement analysis, it is important to study it and learn more ways to use it to help the business. "Users of financial information encompass a wide range of interests and have unique objectives in analyzing financial statements" (Tierra, 2013). Investors and creditors use information from financial statements to make decisions about businesses. They analyze the information to make the best decision. "informed financial statement analysis begins with knowledge of the company and its industry" (Revsine et al, 2021, pg. 6-23). The more information that is presented the more informed decisions that can be made from the information. There are many speed bumps that can come into play for analysts. "The raw data that is needed for a complete and faithful picture do not always reach the financial reports because the information is filtered by generally accepted accounting principles (GAAP) and by management's accounting discretion" (Revsine et al, 2021, pg. 6-2). When accountants review the financial statements it is important to look for these flaws. You can look for these mistakes and learn from them in the financial reports. The bible states, "The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver. and God is able to make all grace abound you, so that having all sufficiency in all things at all times, you may abound in every good work" ( 2 Corinthians 9:6-8, ESV). Financial statement analysis is important for the well being of a business to grow and prosper which is what God wants us to do.
Kenton, W. (2020). Financial Statement Analysis.https://www.investopedia.com/terms/f/financial-statement-analysis.asp
Stobierski, T. (2019). Financial statement analysis: the basics for non accountants. https://online.hbs.edu/blog/post/financial-statement-analysis
Tierra, J. (2003). Financial Statement analysis. Strategy- Canadian Medical Association, 15(2), 14-15. https://search-proquest-com.ezproxy.liberty.edu/central/docview/214347645/CD173B90AF5F46DCPQ/23?accountid=12085
Revsine, L. (2021). Financial reporting and analysis. (8th ed). McGraw- Hill Education
Read 2
Financial Statement Analysis
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· What is financial statement analysis?
According to an article I recently read, on Investopedia, it states that financial statement analysis is, “the process of analyzing a company's financial statements for decision-making purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value.”(Kenton 2020) Therefore making it crucial for organizations to properly examine their financial statements because there next move could be determined through the data presented to them by their financial statements.
· Why is financial statement analysis an important area of study?
Financial statement analysis is an important area of study because the financial statements record important information that can be crucial in order for an organization to succeed. Studying and understanding the financial statements can benefit a company in many ways especially in managing the company’s finances and elevating business performance. Just like it states in our reading, a company’s financial statements can be used for various purposes such as an analytical tool, a management report card, an early warning signal, a basis for prediction, and as a measure of accountability.( Revsine 2021) Financial statements also contain information that is crucial to investors. This information can determine the health of a company and can alter an investors decision.
· What is learned from the process of financial statement analysis?
The most important lesson learned from the process of financial statement analysis is that the organization is able to track and analyze its own performance throughout a certain period of time. As an investor the process financial statement analysis can determine whether an investor will to contribute to the organization.
· Discuss the Biblical implications of reliable and representationally faithful financial statements.
A financial statement can represent a certain degree of representation of a company throughout a certain amount of time. As human beings and followers of Christ we need to be more aware of what we represent because just like an organization people get invested into our lives and we need build each other up. Especially nowadays we should invest in eachother and spread positivity. Just like it states in Mathew 5:16, “Let your light so shine before men, that they may see your good works, and glorify your Father which is in heaven.” (KJV) we need to represent the word of God in a positive way and thus would cause other to invest in the Lord as well.
References:
Bible Gateway passage: Matthew 5:16 - King James Version. (n.d.). Retrieved from https://www.biblegateway.com/passage/?search=Matthew 5:16&version=KJV
Kenton, W. (2020, September 24). Financial Statement Analysis. Retrieved from https://www.investopedia.com/terms/f/financial-statement-analysis.asp#:~:text=Financial statement analysis is the,financial performance and business value.
REVSINE, L. (2021). FINANCIAL REPORTING AND ANALYSIS. S.l.: MCGRAW HILL.
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