BUS 350 Week 3 Discussion 2 | Assignment Help | Excelsior College
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BUS 350 Week 3 Discussion 2 | Assignment Help | Excelsior College
M3.4
Discussion: Firm and Individual Financial Reporting
In this activity, we link personal and corporate finance to
understand why people sometimes behave like corporations, and vice versa. We
begin by asking why firms issue financial statements. Firms that sell ownership
shares to the public are required by law to issue financial statements (see
SEC, “The Laws That Govern the Securities Industry”), but many other firms also
publish similar financial information describing income, assets, and liabilities.
Individuals are asked to produce some of the same information as they apply for
loans and credit. In this Discussion, we think about the mortgage loan
application process to better illuminate information gleaned from a firm’s four
key financial statements. Similarities exist between documentation requested of
an individual applying for a loan and a firm accepting funds from investors. We
explore why this may be true to understand the key financial statements.
Case
Questions
Initial
Post
Speaking as a loan officer, you may use the case of these two
borrowers to illustrate the points you make in this discussion.
1.
Briefly discuss why firms issue financial statements,
considering any one category of user interested in these statements.
2.
Using any one type of financial ratio as an illustration,
explain how financial statements offer a picture of a firm’s ability to serve
as a good manager of invested funds.
3.
Discuss any one financial ratio that a financial institution
might use to evaluate the the suitability of an applicant for a personal loan
(as an example of one ratio, search for the term "debt-to-income
ratio").
Discuss
the similarities between a corporate income statement
USA 
India