bonds allows the company to refund the debt over the life of the issue. A call feature
(in corporate bonds) in a bond enables the issuer to retire it before the expiration date.Sinking fund requirements may exist with regard to a bond issue, the company is
required to set aside money to purchase and retire a portion of the bond issue each year.❖ FINANCIAL STATEMENT AND ANALYSIS
Financial statements information is mostly helpful when management/other Users are
able to read the information it purport to report, by either recognising whether the
company is moving forward or backward in term of profitability, adaptability
potentials, or changes in owners’ equity with substantial attention to the level of the
company’s working capital.
Net working capital is equal to current assets less current liabilities. Management of net
working capital involves regulating the various types of current assets and current
liabilities. Management of net working capital also requires decisions about how current
assets should be financed for e.g. through short term debt, long-term debt or equity.The management of net working capital requires consideration for the trade-off between
return and risk. By optimally managing cash, receivables, and inventory, a company can
maximize its rate of return and minimise its liquidity and business risk.Too little working capital can put a company in a bad position. Because of this, the
company may be unable to pay its bills or to take advantage of profitable opportunities.
On the other hand, too much working capital reduces profitability, since the company’s
capital has a carrying cost, it must by financed in some way, usually through interest
bearing loan or other money and capital market instruments.Financial decisions have a focus on acquiring and allocating resources, this involves
how company or organizations goes about financing and maximising optimum
utilisation of their resources.Each of the users of financial statement will view the statements from the analytical to
qualitative approaches termed financial analysis. Financial analysis involves the