FR2 presentation

1. Name: Aleena Amjad
Course: Financial Reporting-II (8568)
Roll No: BY514671
TOPIC
Financial Reporting and its Implications in
Capital Market
INTRODUCTION
Financial reporting is the financial results of an
organization that are released its stakeholders and
the public.

2. INTRODUCTION
• Financial reporting is a standard accounting practice that uses
financial statements to disclose a company’s financial
information and performance over a particular period usually
on an annual or quarterly basis.
• In simply, a financial report is critical for understanding how
much money we have where the money is coming from and
where our money needs to go.
• Financial reporting is important for management to make
informed business decisions based on facts of the company’s
financial health.
• Basically, a financial statement is a written record that
discloses a company’s financial details and business activities.

3. Financial Reporting in Capital Market
• An income statement also known as the profit and loss
statement summarizes a company’s revenue, expenses and
profits.
• A balance sheet delivers a print of a company’s assets,
liabilities and stockholders’ equity at a single point in time.
• A statement of retained earnings reveals a company’s changes
in equity during a standard accounting period.
• A cash flow statement shows the amount of cash coming in
and out of a business.

4. Financial reports can include the following:
 Financial statements and related footnotes.
 Any financial information featured on a company’s website.
 Records immediate common stock and additional securities.
 Quarterly and annual reports to stockholders.
 Financial reports issued to the Securities and Exchange
Commission (SEC) and other regulatory agencies.
 Press liberates covering quarterly earnings reports.

5. Goals of Financial Reporting
• Providing information to the management of an organization
which is used for the purpose of planning, analysis and
decision making.
• Providing information to investors, promoters, debt provider
and creditors which are used to enable them to male rational
and sensible decisions regarding investment credit etc.
• Providing information to shareholders & public at large in case
of listed companies about various aspects of an organization.
• Providing information to the legal auditors which in turn
facilitates audit.

6. Process of Financial Reporting in Capital
Market
• Relevant and reliable financial information is essential for the
functioning of capital markets.
• Financial intermediaries depend upon the information in
financial statements to evaluate investment opportunities.
• Information by entrepreneurs to investors is not completely
credible because entrepreneurs have an inducement to inflate
the value of their idea.
• Financial intermediaries can assure the quality of financial
statement representations.

7. Implications of financial reporting in capital
market
 Make better financial decisions
 Manage debt
 Simplify our Taxes
 Compliance
 Financial Transparency

8. CONCLUSION
• After the all discussion we have to clear all implications of
financial reporting in the capital market. The market exists
because of the savings that can be invested on it.
• Improved financial reporting that produces accurate high
quality financial reports on a timely basis is critically
important for the development of capital markets.
• In this regard, the regulator of the accounting profession
should take concrete steps to ensure that accountants who keep
the financial records and prepare financial reports for listed
firms are sufficiently knowledgeable and skilled in the matters
of financial reporting and are guided by sound reporting ethics
and the principle of honesty when preparing financial
statements.