Managing Financial Resources and Decisions Assignment - 2

Managing Financial Resources and Decisions - Assignment Example It summarizes all of the revenue and expense items of the firm and presents the final result in term of profit and loss, for a given period of time. Financial statements are prepared to present and record information regarding the financial position of a firm at a given point in time, to show performance of the firm during the particular period, and to depict changes in performance during that period. This information is used by the different users of financial statements to make their decisions. 5. Impact of Inflation:- Financial statements do not account for the impact of inflation hence â€Å"Cannot be a true reflection of growth where the economy is infected with a high level of inflation†. [IBP 2011] 7. Measurability:- Financial statements only record the information that is measureable and do not account for qualitative characteristics and assets and efficiency, competence of workforce and goodwill etc. suitable option available to Paul and Sarah’s. Moreover another benefit of using this option according to Boyneclarke .com is that â€Å"you relinquish no control over your business.† [http://www.boyneclarke.com/ resources/entry/sources-of-business-financing] so investing personal savings will also secure control of the partners on their business and will result in avoiding many managerial and regulatory complexities. Both of the partners Paul and Sarah can invest their personal savings at any agreed ratio into the business to finance its expansion. Paul and Sarah’s. They can add new partners into their business who can provide required financing, moreover if they succeed in adding a competent business partner then it can not only provide financing but also can provide business acumen and can help in administration. it is an equity investment so entails high risk, so venture capital organizations require high expected rate of return on their investment, as