Learning Goals

•Explain how loyals drug abuse accounting. A star sign’s fiscal condition is important to fiscal managers, to the tauten’s creditors, and to investors. Financial managers evaluate the steadfastly to detect weaknesses that gage be corrected and strengths that can be exploited. Creditors evaluate the firm with a view toward determining its creditworthiness, and investors evaluate the firm’s carrying out to determine whether they should vitiate or sell the firm’s seam. A firm’s be shareholders and new(prenominal) investors use pecuniary statements to make investment decisions. Most existing shareholders of a publicly owned firm are non employees of the firm. They scarce invested in the firm’s melodic phrase in an causa to earn a high return on their investment. They bank on financial statement to serve as an index finger of the firm’s recent and future performance. Thus, they whitethorn resolve wheth er to sell the stock they are safekeeping based on a review of the firm’s financial statements. When investors calculate buying a stock, they may depose on financial statements to determine the firm’s financial condition. Based on a review of the firm’s financial statements, they hit an estimate of the firm’s stock charge. If the existing marketplace wrong of the firm’s stock is below the think of that they derive from the financial statements, they may reason that the stock is presently undervalued by the market, which may encourage them to buy the stock. • talk of how firms can ensure proper financial reporting. Firms are trusty for the reporting accurate financial study to their existing shareholders, future investors, and creditors. Unfortunately, managers are sometimes tempted to exaggerate their firm’s financial performance by distorting its financial statements. This may result in a strong demand for the stock, which drives the price higher. Onc! e the price increases, some...If you want to get a well(p) essay, order it on our website: OrderEssay.net

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