A Financial Statement Disclosure Analysis
A Financial Statement Disclosure Analysis
Money is the focus of life in the business world. Every business strives to improve their bottom line. Potential investors want to make a safe investment and receive a high rate of return on that investment. Creditors seek to ensure the safety of their money and increase interest receivables. As such, financial statements are very important to these users. Potential investors and creditors should review a business’s financial statements before investing in the company. The financial statements and related disclosures for publicly traded companies are published by the Securities and Exchange Commission on the web. These statements include important information necessary for users to make informed decisions based on the organization’s financial status. The financial statements provide information about certain financial ratios that potential investors and creditors consider before investing in or giving a line of credit to an organization. However, these ratios are only as accurate as the information provided in the financial statements. Variations in assumptions and methods used in financial statements affect the analysis of that data. As such, organizations also provide the SEC with related disclosures or notes. These disclosures provide statement users with information necessary to make informed decisions regarding an organization’s current and future financial status.
Bed Bath & Beyond is a publicly traded company whose financial statements and related disclosures provide relevant information for potential investors and creditors. An analysis of the disclosures related to cash and cash equivalents, receivables and inventories will show the importance of certain assumptions and methods used.