Report on Financial Statements: Uses and Limitations for Arcadia

This report examines the role and significance of corporate financial statements, focusing on their applications and constraints. It delves into how financial statements, including the balance sheet, income statement, and cash flow statement, are utilized by various stakeholders such as investors, suppliers, employees, banks, and customers to assess a company's financial health and make informed decisions. The report highlights the importance of these statements in evaluating a company's performance, creditworthiness, and potential for profitability, using Arcadia, a British multinational retail company, as a case study. Furthermore, the report acknowledges the limitations of financial statements, such as their reliance on historical costs and the exclusion of intangible assets, emphasizing the need for a comprehensive understanding of their context. The report concludes by underscoring the critical role financial statements play in corporate finance and decision-making.

Corporate
Financial
Statements

Table of Contents
INTRODUCTION ...............................................................................................................................3
MAIN BODY.......................................................................................................................................3
Financial statements use: ................................................................................................................3
Limitations: .....................................................................................................................................3
CONCLUSION....................................................................................................................................3
REFERENCES.....................................................................................................................................4

INTRODUCTION
Corporate finance is the process for corporations how they are deals for funding sources,
capital structure, investment decisions etc. It is about company's financial terms which helps its for
running its activities. It is about the company which use financial statements for its better
performance which helps for higher profitability for the businesses. It is about company's which
makes its statements for financial terms which helps it for better decision making which helps for
the higher profitability for the businesses. Financial statements includes income statement, balance
sheet etc. These statements helps company's for managing its activities for know its expenses,
income, assets, liabilities, profits etc. The company which is includes for this report is Arcadia. It is
the British multinational company which deals for retail sector. It was found for 1903, headquarter
situated for UK. This report includes topics which are uses for financial statements for external
users for the company. Apart from it includes the use for financial statements for company's external
users which helps for higher profitability for the businesses (Abbadi, Hijazi and Al-Rahahleh,
2016).
MAIN BODY
Financial statements use:
Financial Statements: The concept of financial statement which shows the assembling of
entity's financial information by investors, creditors etc. Main financial statements are income
statement, balance sheet, and cash flow statement. To ascertain the firm potentiality whether they
pay the debts or not and determine the entity quality to produce cash, sources of cash and uses of
cash. In this, balance sheet of entity provides the assets and liabilities and profit and loss account
measures income and expenses of the firm. Cash flow statement shows the inflow and outflow of
cash
Investors: The concept of financial statements is essential by the investors because it give
entity's financial performance, cash flow, and whole condition of the firm. With context of Arcadia,
balance sheet are most useful by investors as they can see how total assets are effected, how
enterprise is funded and how much is stock through borrowings and other current liabilities. This
shows the balance of balance sheet and determine risk of the firm through owners equity and
liabilities. Most important thing is income financial statement that shows profit, sales, cost of goods
sold and other income like rent received, interest etc. It shows how firm well performed during this
year and how much earnings was successful (Gokten, ed. 2017). The statement of cash flows also
useful for investors which measure how much cash are inflows and how much cash are outflows
regarding all the transactions that are added and deducted from cash. It is significant for entity
shows how much cash is accessible to meet its short term requirements.
Suppliers: With relevance of suppliers, they used the financial statements is to measure
credit goodness of a entity and determine whether the goods are supply on credit basis. In case of
Arcadia, they would consider financial order in position of cash flows and meet its short term
requirements. To study current and future cash flow of entity. Suppliers must check firm healthy
financial position before they open a credit lines and in case of any past of on time liability refund is
there.
Employees: Financial statements helps employees for the making better decisions for the
company which gives higher profitability for the company. In context for Arcadia, it helps for
making decisions for companies activities for its income, expenses which helps company for better
performance which helps for higher profitability for the businesses (Mcsweeney and Shelton,
2020). The financial statements views the information for its expenses, income, profits, liabilities,
assets which helps for decisions for running activities for the businesses which helps for better
performance which helps for higher profitability for the businesses (Ahmadi and Bouri, 2016).

Banks: In case of banks, they use statements is to revaluation of financial statements allows
to see the trust worthiness and financial health of the firm to determine profitability of loan. With
Context of Arcadia, in case of balance sheet which includes the assets and liabilities. It shows the
cash balances of entity, investments, loans etc. and in liabilities shows capital, borrowings,
reserves. In case of income statement, which display firms financial development over a period of
time.
Customers: Customers who invest for the company for surprising its goods, services. In
context for Arcadia, the retail basis company financial statements helps customers for know
company's performance for purchasing goods which helps for higher profitability for the businesses.
Customers purchases goods, services for the company, financial statements helps them for making
purchasing decisions for the company which helps it for higher profitability for the businesses
(Gebhart, 2017).
Limitations:
Financial statements helps external parties for their investment decisions for the company,
these are views for the historical costs, are not adjust for the inflation, it not considers intangible
assets, wrong for the fraud, not provides actual information about the businesses. It not considers
recent accounting standards, reliability for figures, various methods for accounting. It includes the
monetary value, it not includes R&D, goods introduction, exact profitability for the businesses
(Palepu and et.al 2020).
CONCLUSION
From the above report it has been concluded that financial statements are about which views
financial information for the company's activities which views its expenses, income, profits,
liabilities, assets. These financial statements which helps investors for making investment decisions
for the company. Investors are banks, employees, shareholders, suppliers, customers. Financial
statements provides information which views company's profits for investment decisions. These
helps company for their better performance which helps for higher profitability for the businesses.

REFERENCES
Books and journals:
Abbadi, S. S., Hijazi, Q. F. and Al-Rahahleh, A. S. 2016. Corporate governance quality and
earnings management: Evidence from Jordan. Australasian Accounting, Business and
Finance Journal. 10(2). pp.54-75.
Ahmadi, A. and Bouri, A. 2016. The impact of financial safety act and corporate governance on the
level of financial disclosure: case of Tunis stock exchange firms. International Journal of
Law and Management.
Gebhart, M. S. 2017. Measuring corporate tax avoidance–An analysis of different measures. Junior
Management Science. 2(2). pp.43-60.
Gokten, S. ed. 2017. Accounting and corporate reporting: Today and tomorrow. BoD–Books on
Demand.
Mcsweeney, D. and Shelton, L. 2020. Corporate Financial Disclosures and Environmental, Social,
and Governance Concerns Evolving Issues. Natural Resources & Environment. 35(2).
pp.23-27.
Palepu, K. G., and et.al; 2020. Business analysis and valuation: Using financial statements.
Cengage AU.