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Discussion On Accounts

The document discusses three questions related to analyzing a company's accounts. The first question is about a company's liquidity position and how it affects investor decisions. The second question is about considering a CFO's credit history from company accounts before offering a loan. The third question is about analyzing a company's net profit trends over years to determine its profitability and market performance.

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SIMON BUSISA
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40 views3 pages

Discussion On Accounts

The document discusses three questions related to analyzing a company's accounts. The first question is about a company's liquidity position and how it affects investor decisions. The second question is about considering a CFO's credit history from company accounts before offering a loan. The third question is about analyzing a company's net profit trends over years to determine its profitability and market performance.

Uploaded by

SIMON BUSISA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Discussion on Accounts 1

Discussion on Accounts
Name of Student
Admission Number
Department
University
City/State
Discussion on Accounts 2

Question 1
Information on the Liquidity Position of the Company
This is usually the company’s potential to turn its assets into cash which will entice an
investor since the firm will be capable of meeting its cash demands, for example, dividend
payments (Cao et al. 2021). Therefore, as an investor, I would choose to invest in a company
that is more liquid as opposed to a company that is less liquid. Investors usually expect
returns when they invest in the form of dividends and the retained profits. A company which
is more liquid is also capable of settling the short term debts and pay for activities that require
cash during the daily operation.
Question 2
Credit History of Chief Finance Officer (CFO)
As a staff in the Company’s bank, I would consider the credit history of the CFO from
company accounts records before offering a loan to him or her. This will enable me to
determine the credit score of the CFO and determine whether he or she will be able to repay
the loan (Pedregosa et al. 2020). A good credit score of the CFO from the company’s
accounts data indicates that the CFO will be able to pay the loan whereas a poor credit score
indicates that the CFO will be unable to repay the loan.
Question 3
Information on the Profitability of the firm
A firm is usually started so as to generate and maximise profits. As a staff in the strategic
department, I would be able to determine the performance of the company by analysing the
net profit of the company in the current and previous financial years (Burhan and Rahmanti
2012). If the net profit trend increases in consecutive years this is an indication that the
products and services of the company are considered in the market and meet the needs of
customers.
Discussion on Accounts 3

References
Burhan, A.H.N. and Rahmanti, W., (2012), The impact of sustainability reporting on
company performance. Journal of Economics, Business, and Accountancy Ventura,
15(2), pp.257-272. Available at:

https://pdfs.semanticscholar.org/711a/6e1788e94667dbf489a219eb80172a83140f.pdf

CAO, M.M., NGUYEN, N.T. and TRAN, T.T., (2021), Behavioral factors on individual
investors' decision making and investment performance: A survey from the Vietnam
Stock Market. The Journal of Asian Finance, Economics and Business, 8(3), pp.845-
853. DOI: https://doi.org/10.51153/mf.v16i1.435

Sanchís Pedregosa, C., Berenguer, E., Albort-Morant, G. and Antón Sanz, J., (2020),
Guaranteed crowdlending loans: A tool for entrepreneurial finance ecosystem
sustainability. Amfiteatru economic, 22 (55), 775-791.
DOI:10.24818/EA/2020/55/775

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