" Financial statement tells the value of a business" True or false?

The statement is false .

None of the financial statements will report the value of a business. The main financial statements (balance sheet, income statement, statement of cash flows, statement of stockholders' equity) may provide some helpful partial information, but they will not report the value of the business.

Two reasons why the value of a business is not included in the financial statements are:

• The financial statements are generally based on the company's past recorded transactions. The value of the business will more likely be based on the perceived future transactions.

• The accountants' cost principle prohibits a business from reporting some highly-valued assets such as trademarks, brand names, and an effective management team (assuming these were developed internally).

A contemporary example which demonstrates that the financial statements do not reflect the value of a business is a startup company with a promising future. We may have read that a venture capitalist (VC) invested $10 million in a startup. Based on that investment the startup is assumed to have a total value of $100 million. Well the startup's financial statements will not report amounts anywhere near $100 million. Realistically the financial statements will be reporting negative earnings, few assets and little stockholders' equity. The company's value came from the VC's perception of the company's new breakthrough system that is projected to generate amazing future revenues with a limited amount of expenses.

In short, the financial statements provide only some of the information needed when attempting to determine the value of a business.

Value of business Can managed and valued by market value And as we know financial statement measured by historical value So we can not see value from financial statements

None of the financial statements will report the value of a business. The main financial statements (balance sheet, income statement, statement of cash flows, statement of stockholders' equity) may provide some helpful partial information, but they will not report the value of the business. Two reasons why the value of a business is not included in the financial statements are:

• The financial statements are generally based on the company's past recorded transactions. The value of the business will more likely be based on the perceived future transactions.
• The accountants' cost principle prohibits a business from reporting some highly-valued assets such as trademarks, brand names, and an effective management team (assuming these were developed internally).

 

false...........................thank you for your invitation

False. FS are merely the Financial Position of a company as on a particular date which may help for various decisions as a helping tool but not a conclusive guide. Valuation of company depends not just on internal documents such as FS but a comibanation of internal and external facts and figures.

False,  Generally it Provide a result of business not measures it's value. 

for balance sheet.

1- Because Historical cost principle whereas the value of properties based on cost not market.

2-There is many intangible assets didn't  included in the balance sheet like internally developed intangible assets, patents and the accumulated experience for worker and goodwill and so...  

3- Some of transactions based on estimates of managers.

 

For Income statement.

1- Some

I agree with Ghada's narration.

Financial statement will only speaks about health of the organisation if we have to believe the Commercial Advocates(CA) certification.

I thinks it shows the health of the business

True

" Financial statement tells us the value of a business"

e.g What is profit or loss,assets & liabilities,cash flow,equity etc.

In short organization is sustainable or unsustainable.

 

Financial statements which were prepared based on the conventional accounting standards and GAPPs provide snap shot of the business and its results based on the past transactions. However value of the business depends on the free cash flows (current and future) available as well as expected for future periods. In theory financial statements can be used in converting accounting profits (EBIT) to free cash flows after making number of adjustments and then used for the valuations. When consider about the statement of financial position, it is providing snap shot of the company based on historical figures. However Market value of equity (net assets) and long term debts may be significantly changed than its book values. In an efficient market, market value of such securities will show the true value of the company as it is showing how market is perceived the company.

Hi

 

Financial statement reflects a certain period of time and the business extends to redress mistakes and complete balance between business has and work-in-service financial The statement gives us the outcome of the period of time we find the term financial year, the so-called principle of annual financial statements and there are supplementary data and the whole period of the business maintains a peaceful plot down and up, and we value the census WORKS at the end of the period was completed with the financial statement and I set from which the value of business volume, which tuned and then say that the financial statement encompassed the value of the business, because I confined businessman duration of time index is time reveals the state of business growth Aotrajaa financial statements sit value added during the time periods and missed to tell all periods of their data give financial value to the business because there are events linked to the term decline in business from one period to another