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Business Analysis and Valuation - Essay Example

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This essay "Business Analysis and Valuation" sheds some light on the preparation of the financial statements in accordance with the accounting standards and the companies act is necessary for comparison purposes and uniformity in reporting…
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Business Analysis and Valuation
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            The qualitative characteristics of financial statements are important to the users of financial statements in making decisions. Both Mark Spencer and Morrison are firms that report their financial statements in accordance with the international financial reporting standards. In reporting the performance of a company, the simplicity and understandability of the documents must be ensured (Wahlen, Bradshaw, Baginski, & Stickney, 2011).

            In their reporting, the two firms have ensured that they give a complete set of information-bearing in consideration the detailed quality of the financial reports. In both cases, the major components of the statements are explained e.g. remunerations disclosures, segment reports, and interests disclosures have been made. The reliability of the financial statements has also been made better by the better governance structure and the independence of the auditors. According to the auditor’s reports, the financial statements give a true and fair view of the positions of the company. Moreover, both M & S and Morrison have reported the financial performance in a comparable manner. The performance in 2011 has been compared to those of 2010 to help investors monitor the firms’ progress. Notwithstanding, the notes to the financial statements have been compiled to make the information better understandable. Comparatively, Mark Spencer's notes are detailed.

The government requires the information for determining the tax amounts, customers for purposes of knowing the progress of the companies and shareholders for monitoring the companies return (Palepu & Healy, 2008). The complex nature of the financial statements and the accounting jargon is the limitation in the financial reports.

This explains why both the companies have largely there are no major differences in reporting.

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