Financial accounting

Question

If you were a shareholder in Fibertech sitting in the Board of Directors, based on the information you read in the financial statements, what further relevant questions would you ask to get a more complete picture of the business performance?

Answer 1

I would also ask about customers. How firm are they, what our projected sales were, and if we were likely to be developing major new ones in the near future. Are we producing products with strong market demand ?

I would want to know about capital and financing. What are our accounts payable and the aging schedule? What is our cash reserves ? Is our business cyclical & seasonal, and do we have sufficient lines of credit to smoothly handle it ?

Primarily I would focus on how prepared are we to open our doors for business tomorrow, and how well that will go over the near and intermediate terms.

Answer 2

Ulvi - it's hard to provide an answer without taking a look at the provided financial statements as one would begin there as a starting point.

Regarding business performance, you could start by looking at the earnings per share, price earnings ratio, debt equity ratio to name a few.