The purpose of the balance sheet

at
Categories
Tags

1) Describe the purpose of the balance sheet and how this information is useful to the stakeholders of the corporation.

2) Please describe the information presented on the statement of cash flows. Why is this information important for the stakeholders of a corporation?

 

Sample Solution

The purpose of the balance sheet

The purpose of the balance sheet is to reveal the financial status of a business as of a specific point in time. The statement shows what an entity owns [assets] and how much it owes [liabilities], as well as the amount invested in the business [equity]. A balance sheet helps business stakeholders and analysts evaluate the overall financial position of a company and its ability to pay for its operating needs. It can also be used to determine how to meet your financial obligations and the best ways to use credit to finance your operations. A cash flow statement summarizes the amount of cash and cash equivalents entering and leaving a company. Cash flow statement is important to stakeholders and investors as it helps them understand how much money a corporation is making and spending.

Background (Situational Analysis)
Bangladesh during its initial years of inception was just not the most densely populated location with frequent climatic disasters but also at the top of the list of ‘the least capita income in the world’, which has been the obvious reasons for a topic of debate and criticism for economists worldwide. Henry Kissinger, the former US secretary of state, has commented Bangladesh as ‘A bottomless basket Case’, a term relating the economy of Bangladesh as a handicapped economic state which has no possible future of being self sufficient, (thefinancialexpress-bd, 2014).
The human development report published by the UNDP in 2013, titled ‘The Rise of the South: Human Progress in a Diverse World’, shows different statistics and ranks Bangladesh 146 out of 187 countries is also stated in the report as one of the ‘Highlighted 18’ countries to make a huge progress in the social indicator system, Human Development Index, HDI, (undp,2014).
The total HDI value of Bangladesh is estimated to be 0.515, categorizing it as one of the low development nation and despite having a slow economic condition, Bangladesh has made extraordinary improvements in almost all the other indicator of social human development. Indicators such as ‘life expectancy at birth rate’, ‘attainment years of education’ and ‘Gross National Income, (GNI)’ has been increasing by 14 years, 2.8 years with an expected increase in schooling years to 3.7 years and increasing income by 175% respectively; Bangladesh is amongst one of the leaders in the LDC, (Thedailystar, 2014).
Economists, worldwide are puzzled to solve the situation, where Bangladesh, though they are not attaining much economic growth is constantly improving in the human development through other social factors. If compared to India, despite being a poorer nation, Bangladesh citizens are expected to a 4 years increased life expectancy than Indians. Amritya Sen., the renowned economist of India, admits Bangladesh to be the better performer in terms of social development, criticizing the policy makers of India and suggesting India, the human development approach and techniques of Bangladesh as a basis for f

This question has been answered.

Get Answer
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!
👋 Hi, Welcome to Compliant Papers.
Hi, how can I help?