Financial Analysis
The principal aim and purpose of financial reporting are furnishing information required for an individual or an organization to make informed economic decisions. Financial reporting helps in trailing, analyzing, and reporting business income and expenses. In other words, financial reporting analyses the amount of resources used, the required cash flows performance of the business and the general economic health of the organization. This information helps the stakeholder understand the organization’s activities, and hence they can make informed decisions on how to manage the business. As a marketer, the student will need to understand its financial information to know how marketing activities will influence its overall financial position.
Financial reporting provides information to the investors and shareholders of the business. The shareholders are interested in understanding how the company’s cash is being re-invested and the capital usage efficiency; hence, financial reporting helps investors understand if their money and capital are safe (Pelger, 2016).
Financial reporting helps the business organization in tracing and following –up cash flows. That is where the business cash is obtained from and where it is being utilized. It also provides information on the business’s financial wellness, whether the company is making profits or losses, analyzing and explaining the usage of business assets, equity, and the organization’s liabilities. Understanding the changes in equity, assets, and liabilities one is able to understand and forecast the business going concern. It is therefore very important for the marketing student to understand financial reporting of his or her organisation so as to understand its financial wellness.
Reference
Pelger, C. (2016). Practices of standard-setting–An analysis of the IASB’s and FASB’s process of identifying the objective of financial reporting. Accounting, Organizations and Society, 50, 51-73.
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