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Owners, Banks, Investors, Suppliers, and Customers |
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What do users make decisions based on? |
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Enjoyed immediately with no future value |
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Little immediate gratification, generates returns for a later date |
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What are financial reports? |
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Balance Sheets, Income statements, statement of shareholders equity, statement of cash flows |
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Part of the financial statement. They provide explanations. |
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Prevents fraud from happening |
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Ability to make debt payments when due |
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Ability to generate profit and increase assets |
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Analysis of financial ratios such as the current ratio
Current Ration = Current assets / current liabilities |
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Board of directors (elected by stockholders) does? |
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Hire corporate officers, sets company policy, and selects audit committee |
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Equity investors receive? |
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Credit (including bond investors) receive? |
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Mechanisms encouraging management to act in the best unrest of the shareholders |
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companies, subsidiaries and business segments, which may provide their own financials |
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Prepared when subsidiaries are combined with partners financials |
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Why are Industries important? |
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To understand when analyzing financial statements |
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Equity investors (External) |
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Purchase shares of stock , which represent ownership in the company. The financials are used bu investors to analyze managements decisions |
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Debt investors (External) |
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Provide capital though loans. The financials are used by creditors to assess likelihood of default |
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Uses other companies' financials to assess the competition |
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Part of debt contracts between the company and creditors An agreement |
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Sarabanes - Oxley Act of 2002 |
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Attempt to bolster corporate governance and restore confidence in the US financial reporting system |
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The Securities and Exchange Commission (SEC) |
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Governs financial reporting for publicly reader companies |
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The Financial Accounting Standards Board (FASB) |
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Responsible for the promulgation of GAAP (generally accepted accounting principles) for financial statements |
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The International Accounting Standards Board (IASB) |
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Establishes International Financial Reporting Standards (IFRS) which are an internationally accepted set of standards also used bu some companies in the US |
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