Sample content Learning Team E-Text Assignment ACC 400 Learning Team E-Text Assignment Financial Accounting: Tools for Business Decision Making, 4th edition Chapter 13: Communication Activity: BYP 13-7 Write a memo to R.J. Falk that explains the basis for comparison and the factors affecting quality of earnings. Memo To: ______ CEO From: Team B Date: June 20, 2010 Re: Financial Statement Analysis The actual aim of this memo is to describe (a) the basics for evaluation in examining Ventura fiscal reports and (b) the limits, in case any, in fiscal report analysis. The fiscal report contains relevant details about the organization, for example the financial standing of the organization and modifications, in case any, that must be made. These types of reports are very important to investors and stockholders and for that reason complying of accounting principles isn’t just moral but also essential for the future of the company. The basics for evaluation in examining Ventura fiscal reports are to let creditors, shareholders, and administration to judge Ventura’s tendencies and industry evaluations. Investors assess Ventura’s fiscal reports from period to period to see liquidity, earnings, as well as solvency since they relate to their lasting profits. Liquidity, solvency, and profitability ratios determine Ventura’s short-term capability to pay any of their maturing dues and satisfy any of the company’s unforeseen requirements for money. Ventura’s ratios compare similar companies in their sector to the usual averages in the sector. Horizontal analysis, ratio analysis, trend analysis, and vertical analysis contrast line items and ratios which contain facts to see a particular quantity of sequential intervals. Investors contrast Ventura’s efficiency and profitability ratios to similar organizations to find out which organization has the greatest earnings, assets, and debts within a particular period of time. Financial statements convey activity in financial terms during a particular time period and determine Ventura’s capability to survive as well as satisfy any upcoming dues. The restrictions in fiscal report analysis include pro forma income, alternate accounting procedures, and incorrect recognition. Organizati