CONNECT CARD F/UNDERSTANDING BUSINESS
11th Edition
ISBN: 9781260294811
Author: Nickels
Publisher: MCG
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Question
Chapter 17, Problem 1CT
Summary Introduction
To think critically about: The necessity of an investor to evaluate the financial statements of the company.
Introduction: Financial statements refer to statements that describes the status of the entity’s assets, liabilities, capital, receipts, expenses and earnings.
Expert Solution & Answer
Explanation of Solution
Given information: A person is willing to invest in a company.
Explanation: It is important for an investor to evaluate financial statements of a company due to the following reasons:
- To understand the ability of the company to repay principal or to receive back the capital invested.
- To understand the ability of the company to pay interest and dividend.
- To assess the extent of increase or decrease in the value of the share in case of investment in equity shares.
- Therefore it is important for the investor to assess the financial statements of the company.
Some of the key information that an investor would seek from the financial statements are as follows:
- Net income of the company.
- Total assets of the company.
- Exiting loan of a company.
- EPS of the company.
Conclusion
Thus, investor would be willing to evaluate financial statements, to analyze the return that can expected from the company and the investor would generally seek information regarding net income, total assets, loan and EPS of the company.
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Chapter 17 Solutions
CONNECT CARD F/UNDERSTANDING BUSINESS
Ch. 17.2 - Prob. 17.2AQCh. 17.2 - Prob. 1TPCh. 17.2 - Prob. 2TPCh. 17.2 - Prob. 3TPCh. 17.3 - Prob. 5TPCh. 17.3 - Prob. 6TPCh. 17.3 - Prob. 7TPCh. 17.3 - Prob. 8TPCh. 17.4 - Prob. 17.4AQCh. 17.4 - Prob. 17.4BQ
Ch. 17.4 - Prob. 17.4CQCh. 17.4 - Prob. 17.4DQCh. 17.4 - Prob. 9TPCh. 17.4 - Prob. 10TPCh. 17.4 - Prob. 11TPCh. 17.4 - Prob. 12TPCh. 17.4 - Prob. 13TPCh. 17.4 - Prob. 14TPCh. 17.4 - Prob. 15TPCh. 17.4 - Prob. 1MEDCh. 17.5 - Prob. 12TPCh. 17.5 - Prob. 13TPCh. 17.5 - Prob. 17.5AQCh. 17.5 - Prob. 17.5BQCh. 17 - Prob. 1CTCh. 17 - Prob. 2CTCh. 17 - Prob. 3CTCh. 17 - Prob. 4CTCh. 17 - Prob. 1DWSCh. 17 - Prob. 2DWSCh. 17 - Prob. 3DWSCh. 17 - Prob. 4DWSCh. 17 - Prob. 5DWSCh. 17 - Prob. 1TITCh. 17 - Prob. 2TITCh. 17 - Prob. 1VCCh. 17 - Prob. 2VCCh. 17 - Prob. 3VC
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