Reflection
I would like to do business and invest in future; therefore, I have taken a keen interest in business courses. The outline of the financial accounting statement has turned out to one of the best lessons about business I have learnt. To outlines has helped me understand the basics of a successful business. Thus, this reflection indicates the lessons that I have learnt from the financial accounting overview in the Book Business Ethics.
First, I have learnt that to introduce a successful company I have to understand the business. Understanding the business involves analysis the industry factors, individual company’s factors and wide economic factors. Therefore, by understanding these concepts, I will be able to evaluate whether the business will be able to generate a return on equity. The objective of every business is to generate revenues.
Consequently, I learnt that company’s strategy affects the financial aspect of the organization. Therefore, to comprehend firm’s pricing, control cost and product differentiation strategies helps in improving my financial skills. Thus, knowing the business policy helps me understand the firm’s operating decision, which in turn assists me in understanding company’s transactions and financial statements.
As a young aspiring entrepreneur, the outline helped me understand the how business analyst uses financial statement to understand company objectives. I learnt that financial statements are only used by the management and external decision makers. Therefore, the financial statements help in understanding the company past, present, and future performance. Also, to conduct successful financial analyses, I have to compare the company’s trend with the market trend. Another important aspect of the financial statement I learnt is that ratio, and percentage analysis is a most effective way to know where a business stands regarding finances in the market. Thus, the outline helped me understand the business strategy that makes a business successful.
Critical Analysis
According to the chapter, to understand business one must undertake a market analysis. Therefore, you have to understand the market environment of the business. To comprehend this, you have to conduct SWOT analysis to come up with an investment decision. Hence, if the company is forecasted to generate returns invest in it. The outline indicates that firm’s strategy determines the financial aspects of the firm. Pricing, product differentiation, and cost control aspect make the financial evaluation more meaningful. Thus, financial statement analyzes in an organization is used by the firm management to formulate the entity decision. Financial statement helps the administration to understand the firm’s history, current situation and assist in forecasting the future. Also, the financial statement helps the company to compare itself with its competitors. Therefore, any firm financial accounts are used for comparison purposes only. Hence, to understand the organization financial information we conduct ratios analysis.
Financial ratios help in determining the company’s financial position. There are different financial ratios. The main purpose of the business is to make a profit. To understand the company’s returns position we conduct a return on equity ratio (TEoRo, 2013). This ratio measures the percentage of business profit compared to the investments. Thus, there are different types of financial ratio that help in determining the business position in the market.
From the outline, it is clear that financial ratios are used by firm’s management and investors. The management uses financial ratios to understand the business performance and understand where the business the business can improve to meet its objectives (TEoRo, 213). For instance, if the firm has low profit, the management can figure out new to improve the profits. Consequently, the investors use the financial ratios to determine whether the business is a viable and good investment. Thus by comparing financial ratios between different firms, the investor can understand a good opportunity to invest.
References
Howard, L. W., Tang, T. L. P., & Austin, M. J. (2015). Teaching critical thinking skills: Ability, motivation, intervention, and the Pygmalion effect. Journal of Business Ethics, 128(1), 133-147.
Sabourin, C. (2015). Review and reflection: Essay on the kantian discourse.
TEoRo, E. A. (2013). Business and the Beatific Vision. Theology in the Present Age: Essays in Honor of John D. Castelein, 260.
