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The main reason of this work is to summarize and highlight the principle
key facts in the Business environment and accounting information
according to the book; financial statement analysis and valuation by
Easton D, Peater; and McAnally, Mary Lea. It is expected that the reader
of this summary will be capable of understanding and comprehending
the content explained, therefore, he would be able to analyze valuation
and business data.
It is absolutely clear that to successfully analyze a company or infer its
value, we must understand the companys business activities. Financial
statements help us understand these business activities. These
statements report on a companys performance and financial condition,
and reveal executive managements privileged information and insights.
With the correct use of financial statements the information system of a
company can be used in the making of judgments, assumptions, and
estimations. Which can help in the financial decision making of the
company.
The first step to analyze correctly the accounting information of any
party is to consider the business contest in which the information and
data to be analyzed was created. As important as this step is the
companys strategic business plan is too, for it reflects the plans to
achieve the goals and objectives.
Now, it is really important to establish that the existence of the demand
for financial statements is crucial as an easier way measure parameters
of contracting, risk sharing, and investing during the decision-making.
For this demand there are many regulatory international agencies that
intervene in the requirement to establish a minimum of information.
On the other hand the quantity and quality of accounting information
that companies supply are determined by managers assessment of the
benefits and costs of disclosure. There are two main regulations provided
by the security and exchange commission (SEC); which are: