FINANCIAL STATEMENT-MEANING,OBJECTIVE AND QUALITATIVE CHARACTERISTICS

1. FINANCIAL STATEMENT-
MEANING,OBJECTIVE AND
QUALITATIVE CHARACTERISTICS
PRESENTED BY…
HARSHITHA S
1st M.Com
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. CONTENTS
• Introduction
• Meaning
• Objectives of financial statement Analysis
• Qualitative characteristics of financial statement
• Conclusion
• Bibliography

3. INTRODUCTION
 Financial statements are the means by which
companies communicate their story. Together these
statements represent the profitability and financial
strength of a company.
 The financial statement that reflects a company’s
profitability is the income statement. The statement
of cash flows shows the cash inflows and outflows
for a company during a period of time.

4. MEANING
According to the Financial Accounting Standards Board
(FASB),the financial statements of a firm should provide
sufficient information that is useful to
 Investors and
 Creditors
 In making their investment and credit decisions in an
informed way.

5.  To estimate the earning capacity of
the business concern
 To find out the operating
performance of a company.
 To examine efficiency of various
business activities.
 To find out the financial
performance of a company.
OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS

6.  To judge the managerial ability.
 To compare the performance of a company for
different periods.
 To assess the borrowing capacity of the business
concern.
 To determine the long term liquidity and solvency of
the business concern.
 To decide about the future prospects of the
business concern.
 To know the profitability and collection policy of the
business concern.
 To verify the correctness and accuracy of the
decision taken by the management already.
OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS

7.  To compare the overall performance of the
company with other similar companies.
 To examine the impact of past decision of the
management on financial aspect.
 To determine the debt capacity of the firm.
OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS

8. QUALITATIVE CHARACTERISTICS OF FINANCIAL STATEMENT
Fundamental (primary) Qualitative Characteristics
I. Relevance
To the needs of users to assist in evaluating
performance.
a. Confirmatory value
b. Predictive value
II. Representational Faithfulness
a. Complete
b. Neutral
c. Free from error

9. Fundamental qualitative characteristics
 Opportunity
 Credibility
 Materiality
 Conservation
 Accurate representation

10. Enhancing (Secondary) Qualitative Characteristics
 Verifiability
 Timeliness
 Understandability
 Comparability
• With other business
• With the previous periods results

11. Reliable
• can be relied upon
• Free from material error
• Neutral
• Complete
• Prudent.

12. CONCLUSION
 The study is made on the topic financial
performance using ratio analysis with five years
data in Umami Limited.
 The financial performance of the company for the
five years is analyzed and it is proved that the
company is financially sound.

13. BIBLIOGRAPHY
Objectives Financial Statements Analysis (Retrieved
https://accountlearning.com/objectives-of-financial-statement-analysis/) 20/04/2021
Qualitative characteristics of financial statements
(Retrieved
https://corporatefinanceinstitute.com/resources/knowledge/accounting/qualitative-
characteristics-of-accounting-information/ ) 20/04/2021