Review the following information found in Chapter 17 of the textbook. •Figure 17.5, Very Vegetarian—Balance Sheet, dated December 31, 2012 •Figure 17.7, Very Vegetarian—Income Statement, dated December 31, 2012 •Figure 17.8, Very Vegetarian—Statement of Cash Flows, dated December 31, 2012
You are contemplating investing in Very Vegetarian or possibly purchasing the company outright. Based on this information, as well as the financial statements provided in the textbook, answer the following questions in a two- to three-page paper. Your paper should use APA style.
Why is it advisable to evaluate the company’s financial statements? What key information would you seek to understand about the financial statements? Why? (8 points)
It appears that Very Vegetarian financial statements follow a very strict form. Why must accounting reports be prepared according to specific procedures (GAAP)? Is it permissible for businesses to be allowed some flexibility or creativity in preparing financial statements? Why? Why not? (7 points)
What value do financial ratios offer investors in reviewing the financial performance of a firm? (8 points)
It is always advisable to evaluate the company’s financial statement in order to attain the final position of that particular company. In order to withstand tall, a company always require certain measures. One of such measure is the evaluation of the financial statement. It’s also a major source of boosting a company to do well from the previous accounting year. It also negotiates any kind of financial fraud in the company. In other words we can say that financial statements are the scorecards of a company.
The key information needed to understand about the financial statement are as follows:
1. Which type of statement if being used? Whether balance sheet, trial balance sheet or final accounts, etc.
2. It’s also key to know about the area of more transactions and business.
3. The statements must be narrative and clear. It must not be jumbl