Potential And Operational Quality Business â€Myassignmenthelp.com

Question: Discuss About The Potential And Operational Quality Business? Answer: Introducation In order to derive the picture of overall financial performance of a company at certain point of time, the financial report plays pivotal role. The statements of the report are consisted of balance sheets, cash flow statement and income statement. The financial statements are presented in the explanatory notes that focus on clarification of issues related to use of inventory, change of equity of the owner, contingencies in liability and other material aspects related to business. The paper aims to highlight the importance of financial report as well as how this is applied to derive financial positions and overall performance of the company further influencing the decision and strategy of the business planning. Discussion: Financial Report And Purpose The financial report or statement of any organization is the document recording the activities it performs on the financial sector and its further position in the market with an detailed analysis of the overall performance exerted in certain time period (Carraher and Van Auken 2013). The basic financial statements consist of balance e sheet, income statement, cash flow statement and statement of changes in equity. Balance sheet depicts the financial position reporting on the value and condition of company is owned assets, liabilities, and equity of the owners at a pint of time given. Income statement is the report of the earned profit, income and incurred expenditure of any company during a stated period. Statement of changes in equity let the company feature about the changes made in the equity structure in the company during a time (Weil, Schipper and Francis 2013). To know about a companys cash flows activities operative in investments, financing and other functioning. The broader purpose of the financial report is to enlighten layman about a particular companys financial position, performance and transformation over time that have useful implication for the users in creating knowledge of business issues and activities and helping in choice decisions made by individual or firms as well. Other purposes are: Helps in decision making and further financial analysis by any company Information used in annual report to the shareholder made by management Motivates and determines the Collective bargaining agreement of employees with the management Have huge role in investment. The data and financial analysis made in the report is authentic source of the investors to have knowledge about the proceedings of the company that would help to know the overtime performance and scope of profit from investing in that company (Lusardi and Mitchell 2014). Financial reports are well studied by investors and greatly affect the investment decisions helping them to assess the viability associated with the investment made to the business. Helps in decision making of the financial institution regarding allocation of the working capital to any prospect company (Collier 2015). The report help the bank or financial institution to decide whether loans can be granted to them or debt securities like long term loans by bank, debentures can be extends so that the company can undertake their expenditures or expansionary plans to boost the business growth. Assesment Of Financial Performance: Australia is worlds most attractive tourist destination that records 7.8 million international visitors every year. This has led to existence and operation of various companies providing support to tourists all over the world (Brigham and Houston 2012). Tourism Australia is one such reputed firm that is famous for its innovation based marketing campaigns conducted. The company aims to develop Australia as the most desirable tourist destination on Earth. It is non-profit corporate entity operative under the Australian government supervision. The broad objectives of the company are: Influencing people for travelling in Australia and setting up events Fostering sustainable tourism industry Helping the growth of economic benefit emanating from tourism in Australia As per the law section 42 o f the public Governance of Australia, the company Tourism Australia does have its own financial report for general purpose use by any sources (Higgins 2012). The preparation of the report follows accrual basis having accordance with historical cost method except few assets and liabilities that have been measures at fair value in terms of financial accounting. Statements are presented in Australian dollar. The financial report of Tourism Australia allow the investors to take advantage of the wealth of the information it provides that further helps in evaluation of the company as destination of investment (Healy and Palepu 2012). In terms of analyzing overall and profitability, net income generated by the company in tourism industry is the major component to start with the financial report study. Income statement of the company is fine indicator of profitability since it adds value on the receipt of the company over all the costs made in form of production cost, depreciation, interest cost, tax and other expenses being deducted. But due to possibility of over or understatement, this factor should not drive as the exclusive evaluation factor for any company. Operating margin of the profit is another indicator for capturing profitability and efficacy. It makes comparison on the amount it earn before the tax and interest paid on the generated sales (Asare and Wright 2012). This further helps the investor assess the managerial efficacy to handle all sorts of costs and be able to generate revenue over cost to add more to the profit. Higher operating margin of profit indicates costs are well managed and sales are growing faster than the rise in cost. The financial statement is source of companys stock price assessment and also the earning per share which reflects the profitability and return to the shareholders. The balance sheet of the company contains snapshot view of overall financial health of the company along with asset liability valuation, Capital expenditures situation and evident picture of the debt. The information of the report helps in calculation debt ratio such as current ratio that asses the ability of Tour Australia to handle the outstanding debt. Conclusion From the above discussion, it can be justified about the importance of financial statement in determining the financial picture of any organization. Financial statements are purposed to develop information of all kind of financial activity that a company undertakes and their subsequent analysis of the resultant outcome. These outcomes determine the parameter of the indicators that signals the investors about the profitability of investing in companies to expand business or pay for liabilities of its functioning. Through the making of balance sheets, income statement, equity statement the company enlightens about the core activities in the financial domain and the valuation it contributes to the companys growth overall. Reference Asare, S.K. and Wright, A.M., 2012. Investors', auditors', and lenders' understanding of the message conveyed by the standard audit report on the financial statements.Accounting Horizons,26(2), pp.193-217. Brigham, E.F. and Houston, J.F., 2012.Fundamentals of financial management. Cengage Learning. Carraher, S. and Van Auken, H., 2013. The use of financial statements for decision making by small firms.Journal of Small Business Entrepreneurship,26(3), pp.323-336. Collier, P.M., 2015.Accounting for managers: Interpreting accounting information for decision making. John Wiley Sons. Healy, P.M. and Palepu, K.G., 2012.Business analysis valuation: Using financial statements. Cengage Learning. Higgins, R.C., 2012.Analysis for financial management. McGraw-Hill/Irwin. Lusardi, A. and Mitchell, O.S., 2014. The economic importance of financial literacy: Theory and evidence.Journal of Economic Literature,52(1), pp.5-44. Weil, R.L., Schipper, K. and Francis, J., 2013.Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.