Review the following information found in Chapter 17 of the textbook.
- Figure 17.5, Very Vegetarianâ€”Balance Sheet, dated December 31, 2012
- Figure 17.7, Very Vegetarianâ€”Income Statement, dated December 31, 2012
- Figure 17.8, Very Vegetarianâ€”Statement of Cash Flows, dated December 31, 2012
You are contemplating investing in Very Vegetarian or possibly purchasing the company outright. Based on this information, as well as the financial statements provided in the textbook, answer the following questions in a two- to three-page paper. Your paper should use APA style.
Why is it advisable to evaluate the companyâ€™s financial statements? What key information would you seek to understand about the financial statements? Why? (8 points)
It appears that Very Vegetarian financial statements follow a very strict form. Why must accounting reports be prepared according to specific procedures (GAAP)? Is it permissible for businesses to be allowed some flexibility or creativity in preparing financial statements? Why? Why not? (7 points)
What value do financial ratios offer investors in reviewing the financial performance of a firm? (8 points)
Why is it important to understand that financial ratios can differ from industry to industry? (7 points)
Include APA style reference information as in-text citations and at the end of your paper. (5 points)