HSM-340 Week 2 Discussion Question 2 – Financial Performance (GRADED A)

HSM 340 Week 2 Week 2 Discussion Thread 2: Financial Performance Why it is important to know the scope of business being reviewed when using financial statements. When it comes to knowing what you are looking at- having full understanding into what the data presented means- what the bottom line represents- etc. The first thing is the accounting methods that are being used-specific language or unfamiliar terms you must familiarize yourself with- specific to the information and business that you are reviewing. With this specific topic here is ways in which I thought I would proceed in a similar situation- as if I were reviewing financial statements of a company I was just hired on with, etc. I would begin making sure I had full understanding of all I could- a 360-degree view. I would ask myself, and then others if needed: what is the business? Main objective/values? How are profits/revenues earned/generated? Is it profits/revenue or income? How is the revenue handled? Is there internal/external controls in place- what’s the checks and balances? What is the revenue/liability ratio? Is there any risks involved or is this a safe and established “gamble?” Is there potential growth/vision of growth? Is the company established and trusted in the market? What are the management abilities/visions/styles? Could the company survive a market surge or any set back in profit/sales/services, etc.? If such occurred is there any strategies or known procedures in place? What is the competition/market? What strategies are implemented when it comes to competition? Are there innovations in process? In talks? Vision? Are there shareholders? Have dividends been paid- when and how consecutively? What is the 10-outlook looking like and how does it compare to the original vision upon the birth of the business? When you know the path and can see the path already traveled and why and where the path is currently leading and why- the entire picture can be painted while looking/reviewing said information creating a 360 degree understanding at what you are seeing, etc. You will then have full understanding of the strengths, weaknesses, real risks, preparation, good planning/management or poor planning/management, and what ethics and values are leading the business, reporting, and strategies. This will highlight the accuracy and honesty in the finances, both in handling/management and in reporting. Different types of business call for different accounting types used- which may reflect a different light on the business (especially without that understanding, knowledge or awareness). And all of the above, is just the beginning – for the importance of knowing the scope of business being reviewed when using financial statements. As administration and management level- this understanding is crucial and is necessary throughout all decisions, planning, managing…. Any and all business related action.