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17 download_doc-20.php - Gathering Organizing Reporting...

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Gathering Organizing Reporting Interpreting To run a company effectively, managers must be able to attract capital from outsiders (potential stockholders) who use FS to evaluate the company’s performance and health. Economic consumer perspective – understanding how certain events FS Consumption vs. Investment – consumption is enjoyed immediately and has no future value. Investment generates money at later dates. Seven Official Documents – auditor’s report, management letter, footnotes and 4 others Earning power – the ability to grow and provide a substantial return to its owners. If a company demonstrates earning power, it has faired well. Two forms of investment A) Debt investment – includes maturity date, annual interest, collateral and debt restrictions. It makes the investor a creditor to the company. B) Equity investment – purchase stock; returns are in the form of stock appreciation and dividends. Dividends are decided by BOD. Voting rights awarded in equity investment.
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