Financial statement analysis is done through ratio method to check on various numbers like total expenses and net profit relationship. Manufacturing and service organization's financial statement of two businesses is best made by a certified public accountant to give accurate values. It is essential to check whether both financial statements are audited for data integrity. Comparison of the financial statement needs matching statements reports like profit and loss accounts. Usually, components in financial ratio have many types of ratio thus stating ratios of return on assets, and net profit is essential (Lonsdale, C., & Tam, J. T. 2008). Additionally, the whole comparison indicates which company is more efficient in its operations and less profitable.
Accounting practices in two organizations involve the participation of owners and buyers in the financial analysis. As the owner, there is need to make crucial decisions in the business although they seem to be a difficult decision. Normally the owner is required to work hard on career decisions for the clients and employees to have an easy go ahead rather than giving up. As a result, there will be a successful transition (Subramanyam, K. R., & Wild, J. J. 2009). On the other hand, buyers have higher listing values in a firm especially when expanding or launching a business. APS have tax practices that help buyers to have a successful representation of their interests.
Delegate your assignment to our experts and they will do the rest.
The financial analysis of these two organizations provides some basic accounting lessons. Firstly, they provide some operating information needed for daily operations of conducting business. Secondly, they create a good framework of financial accounting information normally needed by creditors, banks, shareholders, managers, and government. Thirdly, the accounting practices of two organizations provide managerial accounting information especially when setting annual budgets and modifying the business plan (Lonsdale, C., & Tam, J. T. 2008). Equally important, two organizations help in drawing results after analyzing financial performance. Therefore, financial analysis is based on generally accepted accounting principles for business organizations.
References
Lonsdale, C., & Tam, J. T. (2008). On the temporal and behavioural consistency of pre- performance routines: An intra-individual analysis of elite basketball players' free throw shooting accuracy. Journal of sports sciences, 26(3), 259-266.
Subramanyam, K. R., & Wild, J. J. (2009). Financial statement analysis. McGraw-Hill.
