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Accounting Standard

Table of Content
Introduction ................................................................................................................................ 2
Enforcement Mechanism for Accounting Standards ........................................................... 3
Accounting Regulatory Environment and Legal Environment ........................................... 6
Conclusion ............................................................................................................................... 15
Reference.................................................................................................................................. 16
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Introduction
Financial analysis happens to be a very important element of the work of a director; it
supports the driving of trade comprehension and connects trade tactic to outcomes (Brigham and
Ehrhardt, 2011). Financial statements illustrate the fundamental knowledge of a firms operating,
its properties, the financing method of such properties, and the origins and usages of its cash
flow. There happens to be four factors of the financial statements of a firm: Income Statement;
Balance Sheet; Cash Flow Statement; and Notes to Consolidated Financial Statements. Such
factors associate altogether in an upgraded style to give illustration of a firms financial ranking.
According to Brigham and Houston (2011), financial ratio assessment happens to be an
instrument usually employed to achieve extra intuition into a firms implementation since it
permits simple contrast of outcomes between firms and/or fields and brings intuition into
commerce and economic tendencies, and fields of strong and weak point.
Critically the extent to which the legal and professional framework of accounting ensures
that corporate reports provide reliable, relevant, objective and comparable information to
users
Using an illustration of the pyramid of ratios explain how useful is it in interpreting
financial performance. Discuss the limitations of this type of analysis using relevant
examples
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Evaluate the view that companies can minimise their weighted average cost of capital by
integrating a sensible level of gearing into their capital structure


Where: K
e
happens to be the expense of equity; K
d
happens to be the expense of debt, K
o

happens to be the whole or weighted medium expense of capital; and a top degree of gearing -
point X
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Note: Gearing is measured here using V
d
/ V
e

Conclusion
In purpose of providing basic knowledge in financial analysis and management, this study has
critically discussed the ways in which the legal and professional framework of accounting might
be employed to make reliable, relevant, objective and comparable information in corporate
report. Moreover, this report has introduced the pyramid of ratios as single most powerful tool of
interpreting financial performance with discussion its limitations. Additionally, the ways of
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which weighted average cost of capital can possibly minimized by by integrating a sensible level
of gearing into their capital structure.

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